By Alix Langone
February 6, 2019

The market volatility of 2018 may have rattled some investors, but Americans saving for retirement resisted the temptation to take their money out of the market and continued contributing to their accounts despite seeing a decline in returns.

The average 401(k) contribution was $6,850 in 2018, tying a record high, and the average total IRA contribution was $4,200, according to a report released last week by Fidelity. Overall, the average 401(k) balance dropped from a high of $106,500 in the third quarter of 2018 to $95,600 in the fourth quarter, a 10% backslide, according to Fidelity, which manages 30 million retirement accounts.

When the market declines, a common mistake investors make is getting anxious and withdrawing funds; that means they miss out on the future gains and compound interest they could have accrued. Yet Fidelity’s customers didn’t panic. “Similar to 2008, they stayed the course by maintaining their asset allocation and continuing to add to their accounts, a good discipline that can be beneficial when markets rebound, as we’ve seen in the early part of this year,” says Kevin Barry, president of workplace investing at Fidelity, in a statement.

Here is the average 401(k) contribution by age (figures reflect employee contributions only, not any matching funds contributed by the employer):

Despite their steady saving habits, many Americans will still fall short of the nest egg needed for retirement. Advisors say you should put away at least 10 times your income, much higher than the average 401(k) balance of $95,600.

There’s more room for improvement, as both 401(k) and IRA contribution limits were raised this year. Now you can contribute up to $19,000 annually to your 401(k), with an additional $6,000 in “catch-up” contributions allowed if you’re over 50. The IRA contribution limit is $6,000 for people under 50, and the catch-up contribution remains $1,000.

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