Assisted by strong market gains and employers helping to keep workers on cut, Fidelity Investments ’ 2021 year-end analysis of more than 35 million IRA, 401 ( kilobyte ) and 403 ( b-complex vitamin ) accounts finds that the average 401 ( kilobyte ) balance wheel climbed to a record $ 130,700 in the one-fourth quarter, improving 4 % from the third base one-fourth and 8 % from a class ago .
similarly, the average 403 ( b ) report remainder increased to a record $ 115,100, an increase of 4 % from last stern and an 8 % addition from the fourthly quarter of 2020 .
“ Despite facing a kind of fiscal hurdles in 2021, including ongoing grocery store doubt and a careen employment landscape, investors did not let the events derail their efforts and continued to stay focused on the key fundamentals of retirement savings, ” Kevin Barry, President of Workplace Investing at Fidelity Investments, said in a argument. “ By making regular contributions to retirement accounts, not cashing out savings when they change jobs and taking advantage of their employer ‘s contributions, individuals were able to keep their savings on chase as we head into 2022. ”
|Average Retirement Account Balances|
|Q4 2021||Q3 2021||Q4 2020||Q4 2011|
|IRA||$ 135,600||$ 135,700||$ 128,100||$ 69,500|
|401(k)||$ 130,700||$ 126,100||$ 121,500||
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|403(b)||$ 115,100||$ 110,800||$ 106,100||$ 53,700|
Fidelity besides found that more than a third of workers increased their 401 ( kelvin ) and 403 ( barn ) savings rates. According to the firm ’ s data, a phonograph record 38 % of individuals increased their 401 ( thousand ) contributions in 2021, with an average increase of more than 3 % .
Among Gen Z workers, 53 % increased their contribution rate in 2021, adenine well as more than a third ( 38 % ) of women investors on Fidelity ’ s 401 ( thousand ) platform. What ’ s more, 34 % of 403 ( boron ) savers increased their contribution rate in 2021 .
Employers besides continue to make contributions to their employees ’ retirement savings. By the end of 2021, 83 % of workers had their employer make a contribution, in addition their own 401 ( potassium ) contributions, with the average employer contribution reaching $ 4,080 in 2021, Fidelity notes. consequently, the average DC design sum savings rate ( employee plus employer ) stood at 13.9 % in 2021, gradually rising from 12.4 % in 2015 .
A growing percentage of employers are mechanically enrolling new employees in 401 ( thousand ) plan and at a higher salvage rate. As of the end of the fourth quarter, closely 4 in 10 ( 38 % ) employers have car registration as part of their 401 ( kelvin ) .
In addition, more than a one-third ( 37 % ) of plans that use car registration will sign up new employees at a 5 % contribution rate or higher—up from 28 % of plans five years ago .
And once employees are automatically enrolled in their 401 ( kelvin ), Fidelity found that they normally stay in the plan. According to the firm ’ second data, fewer than 1 out of 10 ( 9.1 % ) employees who are automatically enrolled in their 401 ( thousand ) plan decided to opt out. In fact, more than 1.1 million workers were mechanically enrolled in their company ’ mho 401 ( thousand ) plan in 2021 .
furthermore, the deviation in average engagement rates between auto-enrolled and non-auto-enrolled plans is striking. here, Fidelity ’ sulfur datum shows an median engagement rate of closely 87 % for auto-enrolled plans compared to entirely 52 % for non-auto-enrolled .
Not Cashing Out
convinced savings behavior was besides seen in workers not cashing out their 401 ( kilobyte ) randomness when they leave their jobs—according to a late Fidelity study, only 6 % of workers did so.
rather, about a quarter ( 23 % ) rolled their savings into an IRA, 15 % rolled their savings into their newly employer ’ s 401 ( kilobyte ) or 403 ( b ) plan, and 18 % decided to leave their savings with their previous employer. Fidelity notes that another 22 % indicated they are planning to do something with their savings, but have not taken any steps so far .
The tauten besides reports that newly initiated 401 ( thousand ) loans and withdrawals continue to return to pre-CARES Act levels .
As an aside, Fidelity notes that a third base of participants report having considered looking for a new job or to starting one in the by year. While this employee turnover may be concerning for many employers, the firm suggests they are doing themselves a “ disservice ” if they are viewing this work force shift as simply a “ resignation, ” quite than what could be “ an opportunity for attraction. ”