Business View Magazine | February 2018

12 13 OPENING LINES FOR THE FIRST TIME, AVERAGE RETIREMENT SAVINGS BALANCES REACH SIX FIGURES IN 2017 F idelityInvestments recentlyreleased its quarterlyanalysisof401(k) and individual retirement accounts (IRA).Theanalysis re- veals that IRAand401(k) accountscontinue tohit record levels.Increasingcontributionsanda strongstockmarketdroveboththeaverage401(k) and IRAbalancesover sixfigures.Theaverage 401(k) balance rose to$104,300,13percenthigher thanQ42016.Theaverage IRAbalanceclimbedto $106,000,which isalsoa13percentyear-over-year increase. Inaddition,long-term401(k) savers sawsignif- icant increases totheir averageaccountbalance. Forworkerswhohavebeencontributingtotheir 401(k) for10consecutiveyears,theaverage401(k) accountbalance increasedto$286,700,upfrom $233,900ayear earlier.For individualswhohave been intheir401(k) planfor15-straightyears, theaveragebalance rose to$387,100,upfrom $318,500 inQ42016. Individualscontinue to increase their contri- butions toretirement accounts.Inadditiontothe stockmarket’sperformance,retirement account balanceswerebuoyedbyincreasingcontribution rates.Nearlyone third (30percent) of 401(k) savers increased their savings rate in 2017,which rose to 8.6 percent inQ4 2017,an increase from8.4 percent a year ago.Theaverage IRAcontribution rate increasedto$1,730 inQ42017,upfrom $1,590ayear ago. “2017wasagoodyear for retirement savers– notonlybecauseof thestockmarket’sperformance, butbecausemanyinvestors tookpositivesteps towardsmanagingtheir retirement savings,suchas increasingtheir contributionrate,”saidKevinBarry, PresidentofWorkplace InvestingatFidelityInvest- ments.“However,it’s important for individuals to remember that savingfor retirement isamarathon, not asprint,andthat applyinga long-termap- proachtoretirement savings strategyhelps toput investors inabetterpositiontoreachtheir savings goals.” While theaverage retirement accountbalance continues toreachrecord levels,Fidelityhighlights several steps investorscantake tohelpkeeptheir savingsontrackandhelpensure theyarenot over-exposedtoamarketdownturn inthe future: n Checkthepercentageof stockswithinyour retirement account.Whilea risingstockmarket is one reasontheaverage retirement accountbalance has reachedrecord levels,itmayalsohave resulted insomesavershavingmorestockintheir account thantheyarecomfortablewith,basedonhowclose theyare toretirement andtheir comfortwithrisk. n Thinktwicebefore tappingyour retirement ac- count.Whiletappinga retirement account for aseri- ousemergencyisunderstandable,investors should be fullyawareof thepossibledownsidesbefore takinga401(k) loan.For instance,theamountbor- rowedcouldmissoutonpotentialmarketgrowth, and if someone leavesa job,the loanmayhave to be repaid infull inas littleas30days. n Consider a“do it forme”investmentoption, suchasa targetdate fundormanagedaccount. Targetdate fundsandmanagedaccountsarean increasinglypopularwayfor individuals to leverage professional investment expertise tohelpthem manage their retirement savings.