More good news for retirement savers: according to the Fidelity Investments® latest Q3 2024 retirement analysis, retirement savers experienced another quarter of growth thanks to continuing strong contribution levels and positive market conditions. In addition, Gen X-ers continue to make positive strides with retirement savings, with increases in both IRA contributions and the number of IRA accounts making contributions.
Average retirement account balances
Positive gains for retirement savers
14.1%
average 401(k) savings rates
Total average 401(k) savings rates held steady this quarter at 14.1%, driven by employee and employer 401(k) contributions (9.4% and 4.7%, respectively). This savings rate continues to be very close to Fidelity's suggested savings rate of 15% (this includes employee and employer contributions).
6%
increase in account balance for 15-year savers
The average balance for 5-, 10- and 15-year continuous savers is also up for the third quarter, demonstrating the value of consistently contributing in the same plan for an extended period of time. Gen X⁴ savers in their plan for 15 years saw savings jump 6% from last quarter, with an average balance of $586,100 (compared to $554,400 last quarter), which bodes well for this generation as they approach retirement years.
35%
increase in total IRA contributions
Gen X continues to see gains in total IRA contributions, up 35% from Q3 of last year. An increasing number of Gen X accounts also received contributions during this quarter (up 23% from Q3 of last year).
9.5%
increase in 401(k)-created millionaires
The number of 401(k)-created millionaires increased by 9.5% (544,000) from Q2 (497,000). Similarly, IRA-created millionaires increased by nearly 5% (418,111 vs. 398,594). Buoyed by market gains, these individuals are able to reach this level of retirement savings by starting early and contributing consistently over many years.
“We are continuing to observe a dedication to saving for retirement, with contributions to these vehicles holding steady if not increasing. This is meaningful as retirement savers prepare to close out 2024 and establish new budgets and financial goals for the coming year. Consistent retirement contributions during various market cycles is important, but despite what happens in the market, maintaining this commitment in the long run is what will set Americans up for a future of financial wellness and security.”
Sharon Brovelli,
President of Workplace Investing at Fidelity Investments
Spotlight: The “cash-out” conundrum
When employees with 401(k) savings “cash out” when changing jobs, the result is often unnecessary taxes and penalties, as well as the potential loss of retirement savings. As a result of SECURE 2.0 legislation, Fidelity collaborated with Retirement Clearinghouse to create a consortium of recordkeepers with the mission of accelerating the adoption of “Auto Portability,” an automatic rollover service for employees moving small retirement savings from one employer to another.
41%
Of workers typically “cash out”⁵
6,000+
Fidelity plans have adopted Auto Portability to date
2.2 million
Active Fidelity participants in the network
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¹ Fidelity business analysis of 16.2 million IRA accounts as of September 30, 2024. Considers only active participants with balance.
² Fidelity Investments Q3 2024 401(k) data based on 26,000 corporate defined contribution plans and 24 million accounts as of September 30, 2024. These figures include the advisor-sold market but exclude the tax-exempt market. Excluded from the behavioral statistics are non-qualified defined contribution plans and plans for Fidelity’s own employees.
³ Fidelity Investments Q3 2024 403(b) data based on 10,800 Tax-exempt plans and 8.9 million plan participants as of September 30, 2024. Considers average balance across all active plans for 6.37 million unique individuals employed in tax-exempt market.
⁴ Generations as defined by Pew Research: Baby Boomers are individuals born between 1946-1964, Gen X are individuals born between 1965-1980, Millennials include individuals born between 1981-1996 and Gen Z includes individuals born between 1997-2012.
⁵ University of British Columbia Sauder School of Business, “Cashing Out Retirement Savings at Job Separation,” November 2022.
Keep in mind that investing involves risk, including the risk of loss. The value of your investment will fluctuate over time, and you may gain or lose money.
Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.
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