Record-High 401(k) Balances
Balances in 401(k) retirement accounts reached the second-highest average on record during the final quarter of 2024, based on new data from Fidelity Investments.
The financial services firm reported in its latest fourth-quarter retirement analysis that these retirement plans averaged $131,700. This represents an 11% increase compared to the same period in the previous year.
However, when compared to the third quarter of 2024, average 401(k) balances experienced a slight 0.5% decline. The third quarter had set the all-time high for average balances at $132,300.
Rising Contribution Rates
The rate at which 401(k) plan holders contributed to their accounts increased year-over-year to 14.1% in the fourth quarter, according to Fidelity.
Overall, individuals building their retirement savings saw positive growth throughout 2024. Fidelity's analysis, which covered over 50 million retirement accounts, indicated that retirement contribution rates rose for nearly 40% of savers, with an average increase of 2.9%.
Trends in Other Retirement Vehicles
Similar to 401(k)s, average balances for IRAs and 403(b)s experienced minor 1% declines from the third quarter but posted year-over-year gains.
The average balance for 403(b) accounts stood at $117,800 in the fourth quarter, marking an 11% rise from a year earlier.
IRA accounts averaged $127,543, which is an 8% increase from the fourth quarter of 2023, as per the report.
As we have for several quarters now, we observed upwards savings trends in Q4. This is encouraging news and is particularly important for many Gen X savers, who are able to make catch-up contributions. This is an important consideration as the April tax deadline approaches where investors may be able to contribute to an IRA for potential tax deductions for 2024.
Focus on Generation X Savers
Fidelity highlighted the retirement saving efforts of Generation X, those born between 1965 and 1980, in its analysis.
For IRAs, Gen Xers increased their average contributions by 16% year-over-year.
Gen Xers who have consistently contributed to 401(k) accounts for over 15 years achieved average balances of $589,400, an 18% jump from the prior year.
Broader Retirement Context
The deadline for individual tax return filing is April 15, according to the IRS.
A study by Northwestern Mutual last year found that Americans consider $1.46 million the amount needed for a comfortable retirement.
Additionally, the Transamerica Center for Retirement Studies reported in August 2024 that the median retirement age for middle-class retirees is 62.
