Photo (cc) by Tax Credits
Things are looking good for people with a 401(k).
At Fidelity Investments, the largest 401(k) provider, average balances reached a record high of $84,300 in the third quarter, Fidelity says. The average is based on Fidelity’s “corporate defined contribution plan base of nearly 21,000 plans and 12.6 million participants.”
The average is up more than 11 percent from $75,900 a year ago. More than 70 percent of the gains came from stock market growth. “While stocks dipped at the end of September amid fears of the government shutdown, the Dow Jones Industrial Average still ended the month up by more than 10 percent from a year prior,” CNNMoney says. The S&P 500 was up more than 15 percent.
The other 28 percent of gains came from the contributions of employees and employers. You should always snatch up every dime toward a 401(k) your employer offers in the form of matching — it’s free money. (Find out more in “Ask Stacy: How Much Should I Contribute to My 401(k)?“)
For those who have been plugging away at their nest eggs for a while, averages were much higher. “Employees who were continuously active in their 401(k) plan over the last 10 years saw the average balance rise 19.6 percent to $223,100 during the past 12 months,” Fidelity says. “For pre-retirees age 55 or older who have been active in their plan for at least 10 years, the average balance is now $269,500.”
We recently wrote that about half of 401(k) account holders find them confusing. Check out the video below and learn how to make sense of them so you can stress less about retirement: