Market Gains And Higher Wages Push Average 401(k) Balances Up

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shutterstock_149075672Financial planners are rejoicing at news that’s been a long time coming: for the first time ever, average 401(k) balances in the U.S. have cracked the $80,000 mark.

According to CNN Money, which reported on data from Fidelity Investments, the average 401(k) account in the U.S. contains $84,300, up from $75,900 last year. This figure represents and all-time high, and was obtained by analyzing 12.6 million Fidelity account balances. Although only one financial firm was used in the study, Fidelity provides more 401(k)s than any other investment agency in the U.S., indicating that its data is likely representative of the nation’s 401(k) accounts and account-holders.

In general, stock market returns were mostly responsible for the rise in 401(k) balances in 2013; for example, by the end of September, the S&P 500 had gained 15% since the beginning of the year, a huge boon to savers invested heavily in stocks. It should also be noted that slightly higher contribution amounts have also helped spur growth in average 401(k) account balances – while most Americans didn’t increase the percentage of their salaries they put away, slightly higher wages in 2013 mean that the same percent translates to more dollars. Healthy market returns and increasing salaries are both being attributed to a slow but return to economic stability.

In addition to higher average balances, Fidelity’s research also revealed that the way that Americans invest for their futures has changed in the past generation. Many savers are now shying away from managed accounts and opting for index and target-date funds. This is especially true for younger investors; half of those aged 22-34 with a Fidelity 401(k) had invested all of their assets with a target-date fund.

Do you save for your retirement in a 401(k)?