Midday Market Minute: Average 401k Balance Reaches Record High

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The retirement game: Who can play, and who thinks it's an unrealistic dream?

Let's start with the good news.

Retirement money fundsFidelity Investments says the average balance for 401k retirement funds has jumped to a record high of nearly $81,000 dollars in the first quarter.

That's up 8.4 percent from a year ago, and up 75 percent since the stock market bottomed out in March 2009. Since then, the S&P 500 has soared 145 percent.

Why the big discrepancy between the overall market return and the gains to our retirement portfolios? It's because most of us are not fully invested in stocks.

In fact, Fidelity notes that for people who abandoned the stock market during the financial crisis and never got back in, returns have significantly lagged behind those who stayed invested. Fidelity is the nation's largest administrator of 401k plans, and its numbers come from a survey of the accounts it holds

Not surprisingly, people who have been in the workforce the longest have the biggest 401k balances.

For workers 55 and older who have been with the same employer for 10 years or more, the average balance is $255,000 dollars.

Still, that's not enough to make most workers feel secure that they can retire at the traditional age of 65. A new Gallup poll finds that three-quarters of adult workers in the U.S. expect to continue working after age 65.

Forty percent say they'll work because they want to, and 35 percent say they'll work because they have to. Those earning more than $75,000 a year are most eager to stay in the workforce.

And we have the results of a third survey, this one focusing on the youngest people in the workforce: the group of 22-to-32 year-olds known as millennials.

Wells Fargo (WFC) finds that more than half of them are so focused on what they see as "overwhelming" debt loads -- mostly college loans -- that they can't even begin to plan for retirement.

Collectively, they have $1 trillion of student loans to repay. Despite this, and the weak job market for younger workers, two out of three millennials are optimistic that they will end up better off financially than their parents.

-Produced by Drew Trachtenberg


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DD

There are a few basic priciples to follow. Live below your means. Resist compulsive buying and upgrading that auto, cellphone, computer ect. Avoid getting trapped in credit card debt through using cash and spending time before major purchases. Build up a cash reserve to prepare for unemployment. Invest wtih a balanced approach to risk and remain diligent through your career. Save, Save, Save.... I live in one of the worst states for taxes (NY) and have worked with my wife on a consistent strategy. It isn't easy.....

May 24 2013 at 9:11 AM Report abuse rate up rate down Reply
Mike

Wasn't there some lawmaker proposing that they start taxing those accounts now? I remember this being a discussion a few months back but don't recall the details

May 24 2013 at 8:55 AM Report abuse rate up rate down Reply
MASTER

Record high average 81,000. Top fifty MLB players paid more per game.
A lifetime of productive toil versus playing a three hour game.
255,000 average for those over 55 equals a three game series in Miami
Perspective.

May 24 2013 at 8:21 AM Report abuse -1 rate up rate down Reply
Dave

Unbelievable how folks manage to turn good news into bad. When these dropped in 2008, somehow it was Obama's fault, and now that stocks are recovering, it's just a myth and a plot by Obama, etc., etc. And by the way, 401k, 403b, etc. are working just fine. Many Americans, including me, are drawing on the nest egg we scraped to save. But that must be bad, and I am sure Obama did it.

May 24 2013 at 8:15 AM Report abuse -1 rate up rate down Reply
ohger1

Way too much money in these accounts. Obama and company will have to redistribute this money to the "needy"

May 24 2013 at 7:56 AM Report abuse rate up rate down Reply
rforeverfree

There are substantially fewer contributors so naturally the percent rises. Forward.

May 24 2013 at 7:20 AM Report abuse rate up rate down Reply
Kevin

Thanks to a thriving economy put forth by president Obama.

May 24 2013 at 7:01 AM Report abuse -1 rate up rate down Reply
Mike

For us graduates that can't find a job in our majors, this doesn't apply to us.

May 24 2013 at 1:31 AM Report abuse +1 rate up rate down Reply
skygill

Of course. Most 401's are broke. All preplanned by the crooks, who are the darlingsof the media.

May 23 2013 at 9:17 PM Report abuse rate up rate down Reply
ga7smi

wait until you try to cash them in

May 23 2013 at 8:05 PM Report abuse -1 rate up rate down Reply