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HSA, 401(k) Savers Outpace 401(k) Alone

Workers who have both a 401(k) and health savings account (HSA) save at a higher rate than those who save in a 401(k) alone, according to a new survey.

In fact, according to a new report by Fidelity Investments, savings rates for employees with both a 401(k) and HSA are often higher (10.6% in 2016) than those saving in their 401(k) (8.2% in 2016). Additionally, 88% of HSA participants who started contributing to their HSA accounts maintained or increased their 401(k) savings after their HSA enrollment. The number of employees who contribute to both a 401(k) and HSA from Fidelity increased 21% between 2014 and 2016.

Fidelity Investments’ quarterly analysis of its 401(k) and IRAs also found that the total savings rate for 401(k) savers, which combines individual contributions plus employer contributions (such as a company match and profit sharing), reached a record 12.9% in Q1, topping the previous high of 12.8% more than a decade ago (Q1 2006). In addition, a record 27% of 401(k) investors increased their individual savings rate in the last 12 months.

Record Highs


Positive stock market performance and increasing contributions drove the average 401(k) and IRA balances to record levels at the end of Q1; the average 401(k) balance hit $95,500 (compared with $87,600 a year ago, and $74.900 five years ago), while the average IRA balance climbed to $98,100 (compared with $89,300 a year ago and $75,100 five years ago.

Savings rates were also higher for IRAs; in fact, 17% more Fidelity customers contributed to their accounts this quarter versus the same period last year. In addition, there was a 38% increase in the amount being contributed. Among Millennials there was a 42% increase in number of accounts receiving contributions and a 51% increase in the amount of contribution dollars.

The average combined IRA/401(k) balance increased 5% year-over-year, from $260,900 to $273,600, the highest average combined account balance ever.