401K Balances Hit Record High

It is a good time to hold a 401(k). The average balance for these savings plans was around $84,000 for the third quarter, which is an 11% gain from the same time last year, when it was around $75,900. This is according to an analysis of around 12 million 401 (k) accounts by the largest provider in the United States, Fidelity Investments.

The better than expected numbers can be credited to investment gains. For example, even while threats of a government shutdown caused the Dow Jones Industrial Average to quiver late in September, the index still ended with a 10% gain from the previous year. The S&P was up 15% from the same amount of time. Fidelity also noted that about 10% of account holders increased the amount of their 401(k) contributions, which signals investor confidence. This is the largest percentage increase in this category in the five years fidelity has been providing that number.

Fidelity also highlighted a growing trend in financial investing–younger investors are increasingly abandoning “do-it-yourself” investing. According to Fidelity, 33% of their 401(k) savers have all of their money in target date funds, which is a drastic increase from a decade ago, when it was only 3%. But when you look at the strongest trends in retirement savings, target-date funds ranks near the top. According to Shelly K. Schwartz at BankRate, “target-date portfolios are designed to simplify long-term investing by automatically shifting their allocation (or glide path) of stocks and bonds to become more conservative as the retirement date edges closer.” What does this mean? More and more individuals are relying on complex automated analytics to protect and grow their money until it is needed.

So, if you or your business wants to learn more about how to roll over your 410(k) savings into an IRA, and or explore other tax management issues related to your present and future 401(k) account, contact the KatzAbosch Personal Financial Planning Group, phone: 410-290-3288, email: sgershman@katzabosch.com

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