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Record Cash Stashed In 401(k) Plans

Poll QuestionSavers’ 401(k) plans have reached a record-high average.

According to Fidelity Investments, the average 401(k) balance in the more than 12 million accounts it manages is $84,300. That’s 11.1% higher than a year ago.

While this is certainly great news, we hope it signifies the start of some substantial momentum in retirement savings.

Because, let’s face it, that average isn’t going to cut it. Anyone with an account that small will need a much bigger nest egg for their golden years.

They should really follow the lead of employees who have regularly contributed to their 401(k) over the past decade.

Fidelity, a Boston-based mutual fund company, says that group saw a 19.6% increase in their average balance, to $223,000. We can thank a booming stock market for much of the gain as rising equity prices have padded 401(k) accounts.

Pre-retirees over age 55, also active in their plan for at least 10 years, had a slightly higher average balance of $269,500.

Another interesting finding involved professionally managed target or life cycle funds, which are based on the year a participant wishes to retire and go from riskier to more conservative as that date nears.

A third of Fidelity’s 401(k) participants now have their assets in a target fund. Ten years ago, when savers largely chose their own investments using a DIY approach, that number was just 3%.

Plus, more than half of Generation Y are now choosing target funds, which are perfect given the number of years they have before retirement. (Millennials don’t often get a lot of credit, but they deserve some for this smart saving.)

Need to ramp up your retirement savings? Here’s how.



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Comments (1)
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One Existing Comment
  1. Darrell said:
    on November 21st at 08:38 am

    The title of the article states “Record Cash Stashed” but the article says nothing about cash balances, just overall balances.