An analysis of retirement benefits and retirement savings was conducted by Fidelity investments. It has revealed that more people are investing in retirement savings plans. It also revealed that long-term investors have better savings than the new ones but the investment made by younger employees is also satisfactory.
The Record Achieved by Retirement Benefits
As per the analysis which was done by Fidelity Investments, about 13.6% of 401(k) participants raised their savings rate in the first quarter of 2016 which is a new record. The employee contributions also reached a record of 12.7%. It included employer matching funds and profit sharing.
The analysis was done on the accounts of about 13.9 million retirement savers who have assets worth 1.2 trillion. The analysis also found out that people are now saving in 401 (k) retirement plans as well as individual retirement benefits plans. Fidelity’s universe of double-barreled savers has increased by 7 percent when compared on a year-on-year basis. The average contribution of about 1.3 million people stands at $11,600 and it has increased by $300.
Long Term Employees Have Better Savings
The employees who’ve been in their company’s 401(k) plan for more than 10 years have better savings, says the analysis. The average balance of such employees is $240,700 which shows a 2% increase. This increase may not be too great but it’s good enough for dealing with inflation.
Young Employee Benefits
People who belong to the 35-39 age group have an average of $131,000 says the analysis report. A Director of thought leadership focused on workplace retirement plans at Fidelity, Katie Taylor said that these numbers are quite encouraging because as per the company’s rule of thumb if a person is in the late 30s, he or she needs two to three times their salaries in 401 (k) plans.
The Bad News
The bad news regarding retirement benefits is that that S&P index was close to flat and the average 401(k) account balance fell by about 5 percent. The average for 401(k)s is $87,300 while it was $91,800 just a year ago. The average IRA balance is also down to $89,300 from $94,100.
Taylor also stated that the 5 percent drop may not be all bad. Some of it can be due to the fact that there are 400,000 new 401(k) accounts at Fidelity. The balance of new enrollees or re-enrolled people who invested in the retirement benefits plan would be very low so it affects the average badly.