If you've been slowly stashing away money saving for retirement, this is your moment to shine: The value of the average retirement nest egg just hit an all-time high.
According to the latest release from Fidelity, the average retirement account balance hit its third record high in as many fiscal quarters. The average 401(k) balance now stands at $129,300, which is nearly $25,000 higher than the same time last year.
The number of savers who are retirement millionaires — meaning they have $1 million or more put aside for their later years — also just hit a new all-time high of 753,600 accounts. That's twice as many as a year ago, though it's still a small fraction of the "more than 30 million IRA, 401(k), and 403(b) retirement accounts" Fidelity analyzed in its report.
Retirement savers have set multiple records over the past year with the help of a robust stock market. The S&P 500 has literally doubled since its pandemic low.
In addition to soaring stock gains, pandemic lockdowns limited Americans’ ability to spend for much of the past two years, and many people increased their savings as a result. The average credit score jumped to a new all-time high as folks focused on paying down debt. And though a CARES Act provision made it easier for Americans to raid their retirement savings without a penalty during the height of the pandemic, few people actually did.
“The pandemic is clearly fueling a shift in how Americans prioritize their work, health, personal lives and financial well-being, so it’s encouraging to see a continued improvement of retirement savings rates,” Kevin Barry, president of Workplace Investing at Fidelity Investments said in the release.
More than a third of workers — including over 40% of millennials and half of Gen Z savers — also increased their retirement contribution rates over the past year. That will help them save more in both the short and long term, thanks to compound interest.
The average 401(k) contribution rate reached a record high of 9.3%, according to Fidelity. That rate doesn't even include company match payments; with that addition, the total retirement account contribution rate goes up to an average of 13.9%, Fidelity says.
Even so, that still puts the average contribution rate a little below the 15% recommended by experts. If you, too, aren’t contributing at the recommended rate, try increasing your level slightly each year or any time that you get a raise.