The average 401(k) balance held with Fidelity Investments reached $74,500 at the end of the first quarter, a 12% increase from a year ago and a 58% increase from two years ago. This is the highest account level since Fidelity began tracking account balances in 1998.
In addition, nearly 10% increased their deferral rate in the first quarter, the highest level since Fidelity began tracking this measurement in 2006.
Fidelity also released findings on the impact of education on participation, savings levels and asset allocation. Those 401(k) plans that took advantage of Fidelity’s education programs had enrollment rates of 54%, compared to 27% in plans that did not use this benefit. Twelve percent of participants in plans that took advantage of Fidelity’s education increased their deferral rates, compared to 2% of participants in plans that did not make use of the educational tools.
Eighty-five percent of participants in plans that made use of asset allocation information invested in appropriate age-based allocations, compared to 51% of participants in plans that did not address asset allocation. And two percentage points fewer of departing employees in plans that addressed distribution options cashed out of their 401(k), compared to a five percentage point increase in cashing out by employees in plans that did not address distribution.
“One of the best predictors of an employee’s future retirement savings is his or her engagement level in the planning process,” said Carolyn Clancy, executive vice president at Fidelity. “Our innovative approach to employee education is designed to combat inertia and increase the level of engagement by communicating to participants during key life events very simple yet actionable ways to help them improve their retirement readiness.”
Fidelity launched 401(k) employee engagement programs in 2009, and today, 92% of plan sponsors take advantage of them.
“The results are clear,” Clancy said. “Engaging participants over the long term can dramatically increase healthy financial behaviors and the chances to achieve a more successful retirement.”