Average 401(k) balances hit a record high $80,900 at the end of the first quarter because of increased employee and employer contributions and a strong equities market, according to new analysis by Fidelity Investments.
This was an 8.4 percent increase over the prior year, when the average balance stood at $74,600.
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It also represented 75 percent growth since the market bottomed out at $46,200 during the first quarter of 2009.
Pre-retirees, or those over the age of 55 who were employed for 10 or more years with their current employer, showed strong growth over the past four years, with average account balances reaching $255,000, which is nearly double what it was in 2009.
About 1.6 percent of pre-retirees got out of the market during the economic downturn and never rebalanced their portfolios. Their account balances achieved more modest growth, growing 25.9 percent to $101,000 from 2009 until the first quarter of 2013.
In addition to maintaining a diversified asset allocation, pre-retirees contributed an average of 10.3 percent of their annual salaries in their 401(k) accounts during the first quarter – more than 2 percentage points higher than the average 8 percent for all workers. These contributions – combined with a pre-retirees’ average employer contribution of 4.5 percent – brought their average total contribution rate to 14.8 percent.
Nearly 15 percent of pre-retirees made catch-up contributions during the first quarter. Employees can make catch-up contributions beginning at age 50 of up to $5,500 per year to their 401(k) accounts.
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.2 trillion, including managed assets of $1.8 trillion, as of April 30, 2013.