Have you started saving for retirement yet? If not, you need to seriously question yourself on what you are waiting for. You must have heard of 401(k) plans time and again, so quit dragging your feet and make your golden years financially secure.
In time, yours too could join the 196,000 accounts with a balance of at least $1 million in their 401(k) plans with Fidelity. Things are actually looking pretty good for those saving for retirement, as this number shows an increase of 17% from 168,000 in 2018. And needless to say, this new number is a record in the country.
The Largest Provider
Although a number of financial firms deal with 401(k) plans, Fidelity is the largest provider in the US. Collectively, they hold over 30 million accounts, all in retirement money. And while announcing the 17% increase, the firm also noted that 179,700 individuals have saved at least a million for retirement, another record.
On average, Fidelity reports, retirement savings accounts have six-figure balances, with the actual figure being $106,000. Upon a generation by generation analysis, millennials average a balance of around $29,000, and that’s understandable as they are just starting to save. Baby boomers, on the other hand, have been at it for decades now, and the average balance in their accounts is $198,000.
However, the current $106,000 average is below the all-time high, a feat that was reached in 2018’s third quarter, with the amount being $106, 500. A $500 difference isn’t that bad though, is it? Retirement savers are still headed in the right direction.
As Fidelity revealed, a third of their savers increased the amount they put in over the last year. As it stands, contribution per individual is at the highest it has ever been, registering a rate of 8.8%. With the inclusion of what employers contribute on behalf of their employees, the rate stands at 13.5%.
Given that Fidelity feels that you should contribute 15% of your income to your retirement fund, they agree that at 13.5%, Americans are not doing bad at all. In fact, Katie Taylor, the firm’s vice president, was beaming while sharing this interesting detail.
Taylor also recommends that by the time you retire, you should have saved at least 10 times what you earn. You may choose to go with the $1 million that is the gold standard for a perfect retirement package, but the VP reckons that it isn’t always enough.
As such, she says that how much you save up for retirement should be subject to your lifestyle and the expenses that come along with it. And of course, you also have to consider your income before kickstarting your savings journey.
According to a Charles Schwab survey, most Americans believe that to be comfortable after retirement, they have to have saved up at least $1.7 million. That’s a $700,000 difference compared to the gold standard, and we all know how much of an impact such an amount can have.
Of the participants in this survey, Charles Schwab discovered that on average, they save up roughly $8,788 annually. That’s a fairly good sum, don’t you think? No one wants to go broke when they’re old it seems. But isn’t it just smart to plan ahead?