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Studies Bear Good News About 401(k) Deferrals, Balances

Deferral and savings rates in 401(k) plans improved at a stronger rate than expected in 2014, recent studies reveal.

According to Cogent Reports found that almost one-third of participants increased their contributions in 2014. That’s almost 12 percentage points higher than the number who in 2013 said they planned to increase their deferrals last year. And this time, 26% say they will increase their contributions in 2015.

Citing record-setting stock market gains as a primary driver, Fidelity Investments found that average 401(k) balances hit record levels in 2014. The average 401(k) balance was $91,300 by the end of 2014, Fidelity says, and approximately 72,000 participants had balances of at least $1 million.

Other findings from Fidelity’s Q4 2014 “retirement snapshot” include:

  •  The average 401(k) contribution was $9,670, an increase of 4% year-over-year from 2013.
  •  The average savings rate increased to 8.1%, the highest saving rate since year-end 2011. When combined with employer contributions, the average employee savings rate was 12.2% of salary in 2014.
  •  For employees in a 401(k) plan for 10 years or more, the average balance was $248,000, up 11% year-over-year.