In its 3Q 2019 analysis of retirement trends, Fidelity Investments found that market conditions in the third quarter caused average account balances to dip slightly after reaching near-record levels the previous quarter. And while 403(b) balances dipped in the short term, longer-term results were different.
Based on an analysis of 23,000 corporate DC plans and 17.4 million participants as of Sept. 30, 2019, the average 401(k) balance fell to $105,200, which was less than a 1% decrease from $106,000 in the second quarter. Similarly, the year-over-year average balance is down just over 1% from a record high balance of $106,500 in the 3Q 2018. Consider also that the average 401(k) balance in the 3Q 2009 was only $59,100.
The average 403(b)/tax exempt account balance dipped to $88,000, less than a 1% decrease from last quarter but up slightly from 3Q 2018 balance of $87,500.
Long-term savers, however, saw their balances increase to record levels in Q3. Among participants who have been in their 401(k) plan for 10 years straight, the average balance reached a record $306,500, topping the previous high of $306,000 from 3Q 2018. For comparison, the average balance of Boomers was $366,100, while Gen Xers stood at $281,000 and Millennials at $137,300.
Among workers saving in a 403(b)/tax exempt account, the 10-year continuous balance reached $179,000, more than four times the average balance for this group in 3Q 2009, Fidelity notes.
Contributions and Roth 401(k)s
Contribution are also on the rise. As of the 3Q, the average DC plan total savings rate – including both employer and employee contributions – reached 13.4%, up from 11.8% in 2009. What’s more, of those employers offering auto-enrollment, a record 47% are now auto-enrolling employees at 4% or higher, up from 29% five years earlier.
Fidelity’s analysis also shows that more savers are taking advantage of the after-tax benefits of Roth 401(k)s. In just the last five years, the percent of plans offering Roth 401(k)s has increased by 60%, from 48.4% in 2014 to more than 70% as of 3Q 2019.
Moreover, the number of workers contributing to them crossed the one million mark to 1.02 million in 3Q — a nearly tenfold increase from the 109,000 workers who contributed to a Roth 401(k) in 3Q 2009. And they are on the younger side, with nearly half (485,000) of those Roth 401(k) contributors being comprised of Millennials.
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