Retirement balances are up — a sign that Americans are saving more
- Two studies show that U.S. workers are preparing for retirement — despite other reports to the contrary, says MarketWatch. Retirement account balances reached an all-time high, having been on the rise for three consecutive quarters, they say.
- A Fidelity Investments' analysis shows that the average balance in a 401k account was $97,700, and the average balance for an IRA was $100,200, says MarketWatch. Retirement savers with 10-year-old accounts had an average balance of $266,100, a record increase from $78,800 in 2007's second quarter. The market accounted for 53% of the increase and employees contributed 47% of the growth. Bank of America Merrill Lynch released a report with similar findings.
- According to MarketWatch, Fidelity's report shows that millennials, which it categorizes as workers age 21 to 34, are surpassing other generations in making contributions at 82%. Gen X, age 35 to 49 (77%) is next, followed by baby boomers, ages 50 to 68 (75%). MarketWatch says millennials might have the edge in savings over the other generations because of their familiarity with digital tools.
Past studies show that older employees worry about ever being able to retire because they haven't saved enough. A CareerBuilder study found that 30% of workers age 60 and over plan to work beyond 70. So, MarketWatch's report is welcome news.
Despite the good news, some boomers remain behind millennials and GenXers in saving for retirement. Some employers have stepped up by accommodating older workers with phased retirement. Other employers have infused more money into 401k accounts to encourage retirement.
Millennials are serious about saving for retirement. While it's true that millennials might have mastered the tech tools needed to make managing accounts easier, they also appear to know the importance of saving now to ensure a comfortable retirement.
Employers should continue encouraging employees to save for retirement. They can play up the emotional as well as financial benefits of saving. According to a State Street Global Advisors’ survey, a disproportionate number of employees who scored high on the survey's financial metrics segment said they were happy. Some employers advocate automatically placing all workers in a retirement savings account, which they would have to opt out of if they have no interest in participating.