A recent AARP survey found that more than half of adults age 50 and older are worried about whether they will have enough money for retirement.
Americans’ retirement account balances are at their highest level in more than two years due to a combination of rising savings rates and favorable market conditions, according to new research from Fidelity Investments.
Fidelity’s Q1 2024 Retirement Analysis released Thursday is the latest update that tracks savings behavior and balances in 45 million accounts and determines that average retirement balances have reached levels not seen since Q4 2021. did.
Fidelity Investments logo, Oct. 19, 2022, in Chicago. (Jakub Porzycki/NurPhoto via Getty Images / Getty Images)
According to the study, the average 401(k) savings rate hit an all-time high of 14.2% in the first three months of this year, and the average balance increased 6% to $125,900. Both employee and employer savings rates matched record highs of 9.4% and 4.8%, respectively.
Individual retirement account (IRA) balances increased 10% during the quarter to an average of $127,745, while 403(b) balances increased 7% to $113,000.
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Also last quarter, the average account balance of Gen Xers who had been saving for 15 years ($543,400) surpassed the average balance of baby boomers who had been contributing to their accounts for 15 consecutive years ($543,200).
The average U.S. retirement account balance reached its highest level in more than two years in the first quarter of 2024, according to data from Fidelity. (license/image)
“We are encouraged by the growing account balances, which provide solid evidence that retirement savers are continuing to invest, continue to accumulate, and reap financial benefits as a result.” said Sharon Broberg, president of Workplace Investments at Fidelity Investments.
“Through continued participation across generations and income levels, retirement savers will continue to build a better financial future, which is essential to the financial health of so many Americans and our economy.”
High inflation is changing how Americans retire
Due to market growth at the beginning of 2024, account balances have also increased significantly.
“The tech giant is well positioned to make the move,” said Montag & Caldwell, an Atlanta-based investment firm. Q1 Market Commentary He said the U.S. economy remains “remarkably resilient” and that the Fed’s hints that interest rates could be cut later this year contributed to the market’s strong rally in the quarter.
DoubleLine Capital Deputy Chief Investment Officer Jeffrey Sherman analyzes the Fed’s inflation strategy in “Making Money.”
The analysis noted positive signs across all market sectors except real estate, with artificial intelligence at the forefront of driving market momentum.
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“Looking ahead to the rest of the year, it’s unclear how long consumers will be able to maintain their spending habits, especially as savings continue to decline,” said M&C’s M. Scott Thompson. “Slowing wage growth, rising credit balances, and rising interest payments and gasoline prices are adding to the headwinds.
“We continue to expect the Fed’s delayed tightening effects to lead to further easing of economic activity.”
