Retirement account balances have shown a significant recovery in the second quarter of the year, bouncing back from a challenging start largely attributed to market volatility, as reported by Fidelity Investments, the leading provider of 401(k) savings plans in the United States. The average balance for 401(k) accounts has surged by 8% compared to the previous year, reaching $137,800, marking a new record high. Additionally, the average balance for individual retirement accounts (IRAs) increased by 5% year-over-year, climbing to $131,366.
In a notable milestone, the rebound in retirement account balances has led to a record number of 401(k) millionaires. As of June 30, the number of accounts with balances of $1 million or more reached 595,000, reflecting a 16% increase from the first quarter. Similarly, the number of IRA millionaires also rose by 16%, bringing the total to 501,481.
Experts attribute these positive outcomes to consistent savings behaviors among retirement savers. Mike Shamrell, Fidelity’s vice president of thought leadership, noted that the majority of savers continued to make contributions even amid market fluctuations, with the average combined contribution rate—encompassing both employee and employer contributions—holding steady at 14.2%. This figure is slightly below Fidelity’s recommended savings rate of 15%.
The U.S. markets experienced considerable pressure earlier in the year, particularly following the White House’s announcement of country-specific tariffs on April 2, which triggered some of the toughest trading days for the S&P 500 since the onset of the COVID-19 pandemic. However, following this downturn, markets rebounded impressively. Savers who maintained their investment strategies, continued to contribute at robust levels, and refrained from making significant changes to their asset allocations were able to benefit from the favorable market conditions that ensued.
As of mid-week, major stock market indices were performing well, with the S&P 500 up approximately 10% year-to-date, the Nasdaq gaining over 11%, and the Dow Jones Industrial Average experiencing a rise of about 6%. Tim Maurer, a certified financial planner and chief advisory officer at SignatureFD in Atlanta, remarked on the resilience of the market despite its volatility. He emphasized that asset classes with positive rates of return tend to reach new highs over time, reinforcing a sense of optimism among retirement savers.
