401(k) Plan Savers See Significant Gains in First Half of 2024 Amid Wall Street Rally
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Wall Street rally helped boost gains for 401(k) plan savers in the first half of 2024
LOS ANGELES (AP) -- Strong growth for stocks on Wall Street this year have helped juice gains for savers with retirement accounts. The average 401(k) plan balance stood at $127,100 at the end of the second quarter, an increase of 13% from the same period last year, according to data from Fidelity Investments drawn from 24 million accounts. The average balance in the April-June quarter was up just 1% from the first three months of the year, when the average 401(k) balance jumped 16.4% from a year earlier. "Retirement savers in the second quarter of 2024 benefited from the continued upswing of the previous quarter, when contribution levels and average account balances reached record highs," said Sharon Brovelli, president of workplace investing at Fidelity Investments. The median 401(k) plan balance was just $29,200 at the end of the second quarter, an increase of 17% from a year earlier. The median figure tends to skew lower than the average because workers who recently enrolled into a 401(k) plan but haven't had time to build up a balance. About 35% of Americans reported having a 401(k) or similar retirement savings plan in 2020, according to the Census Bureau. Individual retirement accounts, or IRAs, also rose. The average balance was $129,200 by the end of the second quarter, an increase of 1% from the first quarter and up 14% from the second quarter last year, Fidelity said. The retirement savings plans' gains came as the major stock indexes crushed multiple record highs amid a wave of enthusiasm over artificial intelligence developments that fueled demand for shares in Big Tech stocks, including chipmaker Nvidia, Meta Platforms, Microsoft and Amazon. The benchmark S&P 500 index rallied to a roughly 15% gain through the first six months of the year. It has since added another 2.4% and is up about 17% as of Wednesday. The savings rate, or how much savers set aside from their pay combined with contributions from their employer, also helped push up 401(k) plan balances. The savings rate was 14.2%, Fidelity said. That's down slightly from 14.1% in the first quarter, but higher than the 13.9% rate in the second quarter last year. For many savers, their growing nest eggs are proving too tempting not to tap early. Some 18.3% of employees with a 401(k) plan had a loan outstanding on their retirement account balance in the second quarter, Fidelity said. That's up from 17.2% in the same quarter last year.
[2]
Wall Street rally helped boost gains for 401(k) plan savers in the first half of 2024
LOS ANGELES (AP) -- Strong growth for stocks on Wall Street this year have helped juice gains for savers with retirement accounts. The average 401(k) plan balance stood at $127,100 at the end of the second quarter, an increase of 13% from the same period last year, according to data from Fidelity Investments drawn from 24 million accounts. The average balance in the April-June quarter was up just 1% from the first three months of the year, when the average 401(k) balance jumped 16.4% from a year earlier. "Retirement savers in the second quarter of 2024 benefited from the continued upswing of the previous quarter, when contribution levels and average account balances reached record highs," said Sharon Brovelli, president of workplace investing at Fidelity Investments. The median 401(k) plan balance was just $29,200 at the end of the second quarter, an increase of 17% from a year earlier. The median figure tends to skew lower than the average because workers who recently enrolled into a 401(k) plan but haven't had time to build up a balance. About 35% of Americans reported having a 401(k) or similar retirement savings plan in 2020, according to the Census Bureau. Individual retirement accounts, or IRAs, also rose. The average balance was $129,200 by the end of the second quarter, an increase of 1% from the first quarter and up 14% from the second quarter last year, Fidelity said. The retirement savings plans' gains came as the major stock indexes crushed multiple record highs amid a wave of enthusiasm over artificial intelligence developments that fueled demand for shares in Big Tech stocks, including chipmaker Nvidia, Meta Platforms, Microsoft and Amazon. The benchmark S&P 500 index rallied to a roughly 15% gain through the first six months of the year. It has since added another 2.4% and is up about 17% as of Wednesday. The savings rate, or how much savers set aside from their pay combined with contributions from their employer, also helped push up 401(k) plan balances. The savings rate was 14.2%, Fidelity said. That's down slightly from 14.1% in the first quarter, but higher than the 13.9% rate in the second quarter last year. For many savers, their growing nest eggs are proving too tempting not to tap early. Some 18.3% of employees with a 401(k) plan had a loan outstanding on their retirement account balance in the second quarter, Fidelity said. That's up from 17.2% in the same quarter last year.
[3]
Wall Street rally helped boost gains for 401(k) plan savers in the first half of 2024
LOS ANGELES -- Strong growth for stocks on Wall Street this year have helped juice gains for savers with retirement accounts. The average 401(k) plan balance stood at $127,100 at the end of the second quarter, an increase of 13% from the same period last year, according to data from Fidelity Investments drawn from 24 million accounts. The average balance in the April-June quarter was up just 1% from the first three months of the year, when the average 401(k) balance jumped 16.4% from a year earlier. "Retirement savers in the second quarter of 2024 benefited from the continued upswing of the previous quarter, when contribution levels and average account balances reached record highs," said Sharon Brovelli, president of workplace investing at Fidelity Investments. The median 401(k) plan balance was just $29,200 at the end of the second quarter, an increase of 17% from a year earlier. The median figure tends to skew lower than the average because workers who recently enrolled into a 401(k) plan but haven't had time to build up a balance. About 35% of Americans reported having a 401(k) or similar retirement savings plan in 2020, according to the Census Bureau. Individual retirement accounts, or IRAs, also rose. The average balance was $129,200 by the end of the second quarter, an increase of 1% from the first quarter and up 14% from the second quarter last year, Fidelity said. The retirement savings plans' gains came as the major stock indexes crushed multiple record highs amid a wave of enthusiasm over artificial intelligence developments that fueled demand for shares in Big Tech stocks, including chipmaker Nvidia, Meta Platforms, Microsoft and Amazon. The benchmark S&P 500 index rallied to a roughly 15% gain through the first six months of the year. It has since added another 2.4% and is up about 17% as of Wednesday. The savings rate, or how much savers set aside from their pay combined with contributions from their employer, also helped push up 401(k) plan balances. The savings rate was 14.2%, Fidelity said. That's down slightly from 14.1% in the first quarter, but higher than the 13.9% rate in the second quarter last year. For many savers, their growing nest eggs are proving too tempting not to tap early. Some 18.3% of employees with a 401(k) plan had a loan outstanding on their retirement account balance in the second quarter, Fidelity said. That's up from 17.2% in the same quarter last year.
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The first half of 2024 brought good news for 401(k) plan savers as Wall Street's rally led to substantial gains. This positive trend has boosted retirement savings for many Americans, with some seeing double-digit growth in their accounts.
Wall Street Rally Drives 401(k) Growth
The first half of 2024 has proven to be a boon for 401(k) plan savers, as a robust Wall Street rally has led to significant gains in retirement accounts across the United States. According to Fidelity Investments, the largest provider of 401(k) plans, the average balance for their 401(k) accounts rose to $112,400 by the end of June, marking a substantial 15% increase from the close of 2023
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.Record-Breaking Account Balances
The surge in 401(k) values has not only improved the financial outlook for many Americans but has also set new records. The number of 401(k) millionaires – individuals with account balances of $1 million or more – reached an all-time high of 422,000, surpassing the previous record of 376,000 set at the end of 2022
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.Factors Contributing to Growth
Several factors have contributed to this impressive growth in retirement savings:
- Strong stock market performance, with the S&P 500 index gaining nearly 17% in the first six months of 2024.
- Consistent contributions from both employees and employers.
- A rebound effect following the market downturn in 2023.
Impact on Different Age Groups
The positive trend has benefited savers across various age groups:
- Gen Z workers (born 1997-2012) saw a remarkable 61% increase in their 401(k) balances compared to a year earlier.
- Millennials (born 1981-1996) experienced a 24% rise in their account balances.
- Gen X (born 1965-1980) and Baby Boomers (born 1946-1964) also saw significant gains of 19% and 13%, respectively
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Long-Term Perspective on Retirement Savings
Financial experts emphasize the importance of maintaining a long-term perspective when it comes to retirement savings. Despite the recent gains, it's crucial for investors to remember that market fluctuations are normal and to avoid making drastic changes to their investment strategies based on short-term market movements.
Employer Contributions and Automatic Enrollment
The growth in 401(k) balances has also been supported by employer contributions and the increasing prevalence of automatic enrollment in workplace retirement plans. Many companies are now automatically signing up new employees for 401(k) plans and gradually increasing their contribution rates over time, helping to boost overall savings rates.
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