401k balances reach 10-year high

Fidelity Investment's analysis of 11 million accounts shows the average balance the highest in a decade. With video reports.

By John Davenport Feb 23, 2011 5:01PM

By The Associated Press


Most 401(k) accountholders continue to plug away at setting aside a portion of their pay. That consistency, along with a rising stock market helped push balances in plans managed by Fidelity Investment to a 10-year high, the retirement plan provider said Wednesday.


An analysis based on 11 million accounts showed the average balance rose to $71,500 at the end of December.


Article continues below


For participants continuously active in saving for the past 10 years, average balances rose to $183,100 at the end of last year from $59,100 at the end of 2000, Fidelity said.


To put the numbers in perspective, however, keep in mind baby boomers between 46 and 54 should have about 14.6 times their final salary saved in order maintain a similar lifestyle in retirement, according to calculations by human resources consultant Aon Hewitt.


Let's say you're a baby boomer making $60,000 a year. That's means you would need about $876,000 set aside. Total savings should include workplace accounts like a 401(k), accumulated Social Security benefits, and any pension or other retirement savings you may have available.


Younger workers will need even more, advises Aon Hewitt. Those between 31 and 45 will need about 16 times their final pay and the youngest workers -- those between 18 and 30 -- should save 18.7 times their final salary.


The Fidelity study shows workers are remaining consistent with their contributions. The average amount workers defer from their paychecks into their 401(k) plans remained at 8.2 percent for the eighth straight quarter.


That contribution level still falls short of the common advice of planning experts who recommend setting aside 10 to 15 percent of your salary. That figure includes an employer match, which is most often about 3 percent. Assuming most workers receive the common match, they are at least reaching the low end of the suggested savings range.


About 8 percent of the companies offering 401(k) plans through Fidelity reduced or eliminated the employer match at the height of the recession. Since then 55 percent of those have indicated they plan to reinstate the match within 12 months.


"At the end of the day saving at appropriate levels, saving continuously and ensuring that you have the appropriate asset allocation are the most critical components to help ensure that you have sufficient savings for retirement," said Beth McHugh, vice president of market insights at Fidelity.


The Fidelity study also indicated the recession and stock market downturn may have turned the focus of more workers toward retirement planning. About three out of four active participants contacted Fidelity by telephone or Internet in 2010 and more than 1.1 million took advantage of online tools.


Of those who used the savings tools, 47 percent increased contributions to their 401(k)s by an average of three percentage points from 4 percent to 7 percent.

Feb 23, 2011 7:37PM
What abvout pension accounts--- why are the Unions still the bad guys?? More like scapegoats for politicians who cant get the heads out of the bungholes!!
An analysis based on 11 million accounts showed the average balance rose to $71,500 at the end of December.

We are in terrible trouble. Out of 158 million workers in the labor force only 11 million or less than 10 percent have a 401k pension plan and those pension plans are way under funded. Average person makes $62,000 a year (strange because the median is $31,000) so with 15 times salary in the pension plan means $930,000 should be the average in all 401k pension plans. 

Things are going to look very dark for 11 million workers being short so much in 401k pension plans. And things are going to look totally horrible and nasty for 147 million workers without 401k pension plans.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
262 rated 2
480 rated 3
651 rated 4
649 rated 5
629 rated 6
616 rated 7
496 rated 8
346 rated 9
111 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.