Even with the rise in Covid-19 case figures and rising inflation, busy retirement savers have been adding record amounts of cash into their retirement investment accounts.
According to Fidelity Investments, the largest provider of 401 (k) plans in the country, the average balance and account savings rates of 401 (k) reached record highs during the second quarter of 2021, marking three-quarters of growth ascending followed.
Another positive sign for savers ’finances: the number of outstanding loans of 401 (k) also declined.
At the start of the coronavirus pandemic, the average balance of 401 (k) fell 19%, to $ 91,400, amid wild market volatility and uncertainty. But that number has skyrocketed since then. The average balance of 401 (k) reached $ 129,300, 24% more than a year ago. Individual retirement account (IRA) balances also grew, to $ 134,900, on average.
The average savings rate of 401 (k) contributors increased to 9.3%. Young workers seemed particularly confident in their finances: 54% of Generation Z savers with a retirement account increased the amount they contributed over the past year, as did 43% of millennials. Only 7% of workers have reduced their savings rate in the last twelve months.
Of course, this only reflects those who have retirement investment accounts. Fidelity’s research acknowledges that many workers “continue to face financial uncertainty due to the ongoing impact of the pandemic.” But in a sign that part of the financial pain induced by Covid is diminishing, the percentage of workers who reported being stressed fell from 41% in November 2020 to 27% in May 2021, according to a different Fidelity survey.
While things seem more stable for busy Americans, millions of Americans are currently out of work, while many others are not investing at all, making them unable to benefit from recent stock market gains.
Sign up now: Get smarter about your money and your career with our weekly newsletter
Do not miss: Here’s how much money you’ve saved each generation for retirement