Americans Put More Money in 401(k), See How You Compare

Despite poor stock market performance year-to-date, Americans have been increasing contributions to their 401(k) retirement accounts during 2022, according to research recently released by Fidelity.

The S&P 500 fell about 5% in the last quarter, resulting in a lower average 401(k) balance of $121,700, down 7% from the prior quarter. But those low returns haven’t stopped workers from increasing their 401(k) contributions by 0.1% in the first quarter of 2022. On average, according to Fidelity, U.S. workers now contribute 14% of their salary to these accounts. retirement.

This is the highest savings rate on record since Fidelity began tracking the measure in 2010, and just below Fidelity’s recommended rate of 15%.

“While market performance is impacting short-term account balances, the majority of retirement savers have continued to exhibit positive savings behavior,” wrote Kevin Barry, president of Workplace Investing. at Fidelity Investments, in a statement accompanying the findings.

Fidelity’s overall average 401(k) account balance may be an imperfect benchmark for you — it includes accounts from all age groups, from entry-level employees to late-career business executives. Here’s a more filtered breakdown, according to Fidelity data obtained by CNBC Make It:

  • 20-29 years old: $14,600
  • 30-39 years old: $51,200
  • 40-49 years old: $120,200
  • 50-59 years old: $206,100

If these numbers seem high to you, keep in mind that these are average numbers – which tend to be higher than the median numbers, due to how small a number of account holders with balances the highest totals are taken into account in the calculation.

The figures also include employer contributions, which are not available with all 401(k) plans. They do not include other investments or retirement funds, such as Individual Retirement Plans (IRAs), brokerage accounts, or cash savings.

A 401(k) or 403(b) account — especially with employer contributions — is one of the best ways to save for retirement. It may seem counter-intuitive to make contributions when the market is down. But short-term volatility is relatively normal, and retirement accounts like 401(k)s are long-term investments meant to span decades.

The longer you keep money in a retirement account, the better it tends to perform – and the more money you put into it, the greater the effect. Fidelity’s study found that the average 401(k) balance goes from $64,900 to $482,900 after just 15 years.

More than half of Americans polled by Bankrate last November said their retirement savings were not on track. But as CNBC noted at the time, you can often make up for lost time on retirement savings by making catch-up payments or creating an IRA, especially if you don’t have a 401(k) or 403(b) through your employer. .

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