Positive Gains for Retirement Savers
Total 401(k) savings rates
Total average 401(k) savings rates remained consistent this quarter at 14.2%, driven by employee and employer 401(k) contributions remaining at last quarter’s record levels (9.4% and 4.8%, respectively). This savings rate is the closest it has ever been to Fidelity's suggested savings rate of 15% (this includes employee and employer contributions).
Average long-term balances
The average balance for 5, 10 and 15 year continuous savers increased again this quarter, demonstrating the value of consistently contributing in the same plan for an extended period of time. In fact, 15-year Gen X4 savers continue to see their savings increase, with an average balance this quarter of $554,000 (compared to $543,400 last quarter) – a promising sign as this generation approaches their retirement years.
Gen X also increasing IRA contributions
Gen X had a 30% increase in total IRA contributions over the last year, with current contributions the highest they’ve been in the last five years.
401(k) and IRA-created millionaires
This quarter saw another all-time high in retirement-created millionaires, with 401(k)-created millionaires increasing by 2.5% (497,000) from Q1 (485,000) and IRA-created millionaires increasing by 6% (398,594 vs. 376,275). These individuals were able to reach this level of retirement savings by starting early and contributing consistently over many years.
Spotlight: Non-profits and Retirement
Fidelity’s biannual study of its 2,500 nonprofit retirement plans, Better Outcomes for Nonprofit Organizations, places a spotlight on the savings behaviors, engagement and retirement readiness of savers working within the nonprofit industry (e.g., hospitals, universities, etc.). The latest report reveals retirement readiness measures for nonprofit employees have steadily increased over the last ten years, including:
.
+10%
Participation rates
Up from 72% to 82%
+2.7%
Savings rates
Up from 8.5% to 11.2%
+16%
Age-appropriate allocation
Up from 68% to 84%
+17%
Retirement plan engagement
Up from 55% to 72%
$249K
Average account balances
3x increase from $70K for continuously active participants
223K
Participants
4x increase from 52,000 participants with at least $500k in assets
*Unless otherwise noted, data within is based on Fidelity's analysis of savings behaviors and account balances for more than 48 million IRA, 401(k), and 403(b) retirement accounts.
1Fidelity business analysis of 15.8 million IRA accounts as of June 30, 2024. Considers only active participants with balance.
2Fidelity Investments Q2 2024 401(k) data based on 26,000 corporate defined contribution plans and 24 million accounts as of June 30, 2024. These figures include the advisor-sold market but exclude the tax-exempt market. Excluded from the behavioral statistics are non-qualified defined contribution plans and plans for Fidelity’s own employees.
3Fidelity Investments Q2 2024 403(b) data based on 10,010 Tax-exempt plans and 8.6 million plan participants as of June 30, 2024. Considers average balance across all active plans for 6.37 million unique individuals employed in tax-exempt market.
4Generations as defined by Pew Research: Baby Boomers are individuals born between 1946 – 1964, Gen X are individuals born between 1965-1980, Millennials include individuals born between 1981 – 1996 and Gen Z includes individuals born between 1997 – 2012.
