Workers are flooding their retirement accounts with record amounts of cash as confidence recovers following pandemic stress
- Retirement account balances rose to record highs in the second quarter of 2021, Fidelity said on Thursday.
- The average
IRAaccount balance increased to $134,900 and the average 401 (k) balance reached $129,300.
- Younger workers and Baby Boomers alike are pushing more money into their accounts.
Baby boomers and younger workers alike have been shoveling more money into their retirement accounts, pushing balances to record highs in the second quarter and highlighting signs of ebbing stress about the pandemic, according to a report from Fidelity.
Younger workers have been stepping up their savings with the average 401(k) savings rate logging a record 9.3% in the second quarter. Fidelity said 54% of Gen Z workers and 43% of millennials have increased their savings rates over the last year.
Aiding overall balances was a rise in equities during the second quarter. The S&P 500 index gained 8.2% between April and June as it accumulated high records, contributing to the 17% advance year to date. Blowout corporate earnings reports and improvement in the labor market have helped the benchmark recover from the plunge it suffered during 2020 as the COVID-19 outbreak put the US
"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 and individuals expressing more feelings of hope and fewer feelings of stress," said Kevin Barry, president of Workplace Investing at
The firm said positive sentiment among 401(k) savers is reflected in a few measures of investor behavior, including that less than one in five individuals, or 17.5%, had an outstanding loan from their 401(k) in the second quarter.
"While some workers may still have to tap their 401(k) to help address a financial challenge, the long-term trend of decreasing loan usage continued in Q2," Fidelity said.
Meanwhile, with the youngest Baby Boomers this year reaching 57 years of age, a record 18.2% of that group made a "catch-up" contribution to their 401(k) in the second quarter. 58% put in the maximum catch-up contribution of $6,500 by the end of last year.
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