America’s Average IRA Balance Is Anemic: How Does Yours Stack Up?

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A new year brings renewed financial goals. But many Americans ought to aim higher in 2017 if they hope to retire anytime soon.

The average retirement account ended 2016 with a lackluster balance, judging by Fidelity Investments’ latest quarterly analysis of individual retirement accounts and 401(k) accounts.

Fidelity administers investment accounts that are collectively worth more than $5 trillion. Its most recent data — from the third quarter of last year — shows that:

  • The average balance in IRAs administered by Fidelity was $94,100. That’s up from $88,800 one year prior.
  • The average balance in 401(k) accounts administered by Fidelity was $90,600. That’s up from $84,400 one year prior.

Whether those balances are good news or bad news is relative to how far out retirement is for you. Millennials with another 30 years to grow their balances might think that $90,000 sounds fantastic.

If you have $90,000 in an IRA and add $5,500 per year (about $458.33 per month) for 30 years, earning 7 percent annual interest, you’ll end up with about $1.2 million. We figured that using the U.S. Securities and Exchange Commission’s free compound interest calculator.

For older Americans planning to retire in the next decade, however, $90,000 might sound terrifying.

If you have $90,000 in an IRA and add $5,500 per year for 10 years, earning 7 percent annual interest, you’ll end up with about $253,000.

As Money Talks News founder Stacy Johnson writes in “The 10 Commandments of Wealth and Happiness“:

“… making money over long periods of time is easy — making money overnight is the flip of a coin.”

Fidelity’s latest figures might indicate that some Americans haven’t been contributing as much to their retirement accounts as they could, however.

Between the third quarters of 2015 and 2016:

  • Fidelity’s average IRA balance increased by $5,300. But during that period, the IRS allowed Americans to contribute up to $5,500 (or $6,500 if they were age 50 or older) per year to IRAs.
  • Fidelity’s average 401(k) balance increased by $6,200. But during that period, the IRS allowed Americans to contribute $18,000 per year to 401(k) accounts.

By the way, the IRS recently announced that IRA and 401(k) contribution limits for 2017 will not increase.

For help managing your retirement savings accounts, check out:

How do you feel about the average IRA or 401(k) balance, or how your own compares? Share your thoughts below or over on our Facebook page.

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