PLANADVISER - July/August 2017 - 20

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SAVING AT RECORD LEVELS
Fidelity finds that people squirrel away an average 12.9%
A BENEFITS analysis survey by Fidelity
Investments
found that
its
Those 70 and older contributed the
clients'
participants are saving more than ever
before. The total average savings rate
for 401(k) investors, combined with
employer matches and profit sharing,
reached a record high of 12.9% in the
first quarter of this year. The previous
high was seen in Q1 2006, when the
total average savings rate was 12.8%.
The average employee deferral rate
was 8.4%, with an average employer
match of 4.5%.
Savings rates were highest among
older age groups. The youngest cohort
for which Fidelity tracked data-ages
20 through 24-saved an average of
6.2%. Those between 35 and 39 saved
on average 7.5%. Participants nearing
traditional retirement age-60 through
64-on average saved 10.8%. However,
participants working past retirement
age contributed the largest deferrals.
peak average of 12.3%.
Across all age groups, Fidelity found,
27% of participants increased their
savings rates in the past 12 months.
Almost half (43.4%) of participants
between ages 20 and 24 increased their
savings rates, and 15.5% of those 70
and older increased their rates as well.
In addition, Fidelity found the
average 401(k) balance hit a record
high of $95,500-up from $74,900 five
years ago. The firm attributes these
results to positive equity performance
and participant behavior. The youngest
savers-20 through 24-had an average
balance of $4,200. The average balance
for those 30 through 34 was $28,600; for
those 60 through 64, it was $163,700;
and for those 70 and up, $173,600.
" It's encouraging to see the growing
number of people who contributed to
their retirement savings this quarter, "
says Kevin Barry, president, workplace
investing, Fidelity Investments. " While
retirement account balances were
aided by positive stock market performance
in the first quarter, consistent
saving in a retirement savings
account-any account, whether that's
a 401(k), IRA [individual retirement
account] or both-can have a significant,
positive impact on your longterm
retirement success. "
Moreover, Fidelity also found that
more participants now contribute to
both a 401(k) and a HSA (health savings
account). Despite the fear that saving
to both vehicles would lessen what
participants contribute to their 401(k),
Fidelity reports that savers to both put
more into their 401(k) on average than
did those contributing only to that
plan. Barry adds: " HSAs and 401(k)s
can contribute to financial wellness. "
-Javier Simon
ROLLOVER
HELP
80% of defined contribution
participants seek out advice
before rolling assets from their
401(k) plan to an individual
retirement account, the LIMRA
Secure Retirement Institute
found in a survey.
COUNTING
ON SOCIAL SECURITY
Even Americans younger than 30 expect it will still exist
WHILE 43% of Americans between
ages 50 and 64 plan on Social Security
being there for them in retirement,
the same can be said for 25% of those
18 through 29. By comparison, only 13%
of 18- through 29-year-olds said this
in 2007.
The growing projected reliance on
Social Security among young people
is somewhat surprising, given that,
over the past 16 years, they have been
less likely than older Americans to
make that projection, according to a
Gallup poll. Previous Gallup surveys
have shown that nearly two-thirds
of people under 50 are skeptical that
they will
receive a Social Security
benefit when they retire.
Despite recent stock market gains,
48% of non-retiree respondents said
they will rely on their 401(k) savings
for a majority of their retirement
income, below the 53% who said so
in 2003. Following the 2008 recession,
the percentage dipped, in 2011, to a
low of 44%.
Meanwhile, the percentage of
Americans of all ages who expect to
rely on Social Security as a major
source of their retirement income has
continued to increase, from 28% in
2003 to 33% this year. -Lee Barney
20 | planadviser.com july-august 2017
http://www.planadviser.com
PLANADVISER - July/August 2017

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