Good News and Bad News About Your 401(k) Balance

What's Hot


The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

How a Mexican Tariff Will Boost the Cost of 6 Common PurchasesFamily

This Free Software Brings Old Laptops Back to LifeMore

How to Protect Yourself From the ‘Can You Hear Me?’ Phone ScamFamily

Report: Walmart to Begin Selling CarsCars

Is Your TV Tracking You? Here’s How to Tell — and Prevent ItAround The House

Trump Scraps FHA Rate Cut — What Does It Mean for You?Borrow

Where to Sell Your Stuff for Top DollarAround The House

11 Staging Tips to Help You Get Top Dollar When Selling Your HomeAround The House

8 Tuition-Free U.S. CollegesCollege

10 Overlooked Expenses That Ruin Your BudgetFamily

4 Car Insurers That Might Raise Rates Even When the Accident Wasn’t Your FaultCars

How to Invest If Trump Kills the ‘Fiduciary Rule’Grow

20 Simple Hacks to Make Your Stuff Last LongerAround The House

12 Surprising Ways to Wreck Your Credit ScoreBorrow

If your 401(k) balance resembles that of the average worker, congratulations! But find out why you also need to do much more.

If your 401(k) balance resembles that of the average worker, give yourself a pat on the back. Then continue building your retirement savings.

According to the latest numbers from Fidelity Investments — which administers investment accounts worth $5.7 trillion — 401(k) balances ended 2016 at a record high.

Kevin Barry, Fidelity’s president of workplace investments, notes “this shows people are taking the right steps towards reaching their retirement savings goals.” However, it also shows they could be doing more.

Let’s start with the good news, though. According Fidelity’s numbers for the fourth quarter of 2016, which the firm released Thursday:

  • The average 401(k) balance reached an all-time high of $92,500, which reflects an increase of $4,300 from one year earlier.
  • The total amount saved in 401(k) accounts over the past year, including both employees’ contributions and employers’ matches, reached a record high of $10,200.
  • The average 401(k) contribution rate reached 8.4 percent, the highest it’s been since 2008.
  • The percentage of 401(k) account holders with outstanding 401(k) loans fell to 21 percent, the lowest it’s been since 2009.

Now for the bad news. First off, workers could be socking away a lot more.

As we recently reported, for both 2016 and 2017, employees can contribute up to $18,000 per year to a 401(k) if they are under 50. The limit jumps to $24,000 for people 50 or older.

If you’re unable to contribute the maximum, make sure you’re at least contributing as much as necessary to get the full match from your employer. Otherwise, you’re leaving free money on the table. Money Talks News founder Stacy Johnson explains why you should try to contribute mightily and regularly to your 401(k) plan:

First, always contribute as much to your qualified retirement as you can, because every dollar in taxes you save by doing so is like getting an interest-free loan. Second, always, always, always contribute enough to get the maximum amount of free money your employer is offering.

To learn more, be sure to check out “Ask Stacy: How Much Should I Contribute to My 401(k)?

Should you borrow against your 401(k)?

While fewer employees are borrowing against their retirement funds, 21 percent still do so, based on Fidelity’s figures. That means 1 in 5 folks with a 401(k) are borrowing from it.

Whether that’s OK depends on your situation. As Stacy explains:

“Whenever someone asks me about borrowing more to deal with debt, the first question I have is, ‘Why are you in debt in the first place?’ If you have debt because you’re regularly spending more than you’re making, all you’re doing is kicking the can down the road. …

If, however, the debt you’re dealing with arose because of a temporary and now resolved situation, such as an illness or job loss, great. The less interest you pay, the sooner you’ll recover.”

To learn more, check out:

How are you preparing for retirement? Let us know below or on Facebook.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: 30 Awesome Things to Do in Retirement

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,838 more deals!