Fidelity Investments Study Finds Average 401(k) Balance at Record High

A new report released by Fidelity Investments revealed the average 401(k) account balance in the U.S. reached a record high of $74,900 as of March 31. According to the report released on Wednesday, the increase was largely attributed to a rebounding economy and stock market gains.

Stock Market Gains Contribute to 12-Percent 401(k) Balance Increase

In a report that tracks the quarterly balances of 401(k) accounts, Fidelity determined that account holders saw the highest balance totals since the firm began tracking figures in 1998. This record comes after the firm said the average balance reached a 10-year high in Dec. 2010.

Following the savings plan figures of roughly 11 million workers year over year, the report determined the balance averages increased a whopping 12 percent at the end of the first quarter 2011 from a year earlier. Two-thirds of the credit for the increase goes to market gains and the rest is attributed to continued contributions by employees.

Employees Contribute More to Accounts

Beth McHugh, Fidelity vice president, said in a Reuters report that about 10 percent of the plan participants increased their contributions to retirement savings plans in the past quarter, while only 3.2 percent cut their contributions. This helped to increase the average balance.

However, the report found that other measures still showed stress, including the percentage of plan participants who have borrowed money from their accounts. As of March 31, the number of participants borrowing from their plans stood at 22.1 percent. While this is down from 22.4 percent on Dec. 31, the number at the end of last year represented the all-time high, meaning too many people are still borrowing.

The good news is workers are expected to continue contributing to their accounts largely due to their increased knowledge of account activity with 401(k) details becoming more transparent. With greater control, they have taken advantage of their exposure to market volatility and have, in turn, worked to craft retirement strategies that are more comfortable for them.