Average retirement savings account balances continued to increase in the second quarter, reaching near-record levels after dipping at the end of 2018, Fidelity Investments reported Wednesday.
The second quarter average 401(k) balance rose by 2% to $106,000 from the first quarter. The average balance was also up by about 2% from $104,000 in second quarter of 2018.
The average IRA balance increased to $110,400, a 2% increase from last quarter and 3% higher than a year ago. And the average 403(b)/tax-exempt account balance rose to $88,600, a 3% increase from last quarter and 6% from the year-ago quarter.
According to the report, the number of people with $1 million or more in their 401(k) account shot up to a record 196,000 from 180,000 at the end of the last quarter, while the number of IRA millionaires increased to 179,700, also a record high and an increase from 168,100 last quarter.
Employees contributed at a record-setting rate of 8.8% in the second quarter, nearly one percentage point higher than 10 years ago, the report said.
Thirty-two percent of savers increased their contribution rate in the April-to-June period, the highest quarterly percentage ever and nearly three times the 11% of savers who bumped up their contribution rate in the 2009 second quarter.
Among millennials, 38% of workers increased their savings rate, while 34% of women did so.
“The record number of workers who increased their 401(k) contribution rate is a great indication of how focused Americans are getting about saving for retirement,” Kevin Barry, president of workplace investing at Fidelity Investments, said in a statement.
“Increasing your contribution rate, even by 1%, can make a big difference in your long-term retirement savings — what may seem like a small amount today can have a significant impact on your account balance in 10 or 20 years.”
The report said that millennial ownership of IRAs increased by 20% from the year-ago second quarter. For millennial women, the year-over-year increase was 19%.
Fidelity reported that among participants who had been in their 401(k) plan for 10 consecutive years, the average balance reached $305,900, more than five times the average balance of $59,900 for this group a decade ago.
As of the end of the second quarter, upward of 1.6 million individuals had been in the same 401(k) plan since the 2009 second quarter.
Since the passage of the Pension Protection Act of 2006, the percentage of employers that automatically enroll new employees in their company’s 401(k) has increased to nearly 35%, Fidelity noted in the statement.
And as the number of employers that auto-enroll employees has grown, the default contribution rate for auto-enrolled workers has also steadily increased.
At the end of the second quarter, about one in five employers had defaulted auto enrolled employees at a contribution rate of 6% or higher, up more than three times the 6% of employers that defaulted employees at this rate as of the second quarter of 2009.
Although a 3% default contribution rate is still most popular among employers, the percentage of those defaulting at this rate has dropped to 44%, down from about 60% 10 years ago, Fidelity said.