A little bit of good news…
Your plan participants might be feeling a little down about their own personal economic situation. With the recent 2% hike on Social Security tax and the nearly 50 cent increase in average gas prices since January 20, participants’ wallets are feeling the pinch. Participants might be tossing those 401(k) return statements without ever reading them just to avoid even more bad news. But wait! Participants might be tossing their chance to share in a glimmer of hope for economic recovery.
On Thursday, February 14, 2013, Fidelity Investments reported an all time high average balance for the 12 million 401(k) accounts it managed in 2012. The average account balance rose 12% from 2011. Two thirds of the increase was due to market performance and the other third was due to increases in participant and employer contributions.
The average 401(k) account balance is now $77,300 compared to the average balance in 2009, when the investment market bottomed out, of $46,200. Average savings for 2012 were about 8% of participant salaries and when you include employer contributions, average savings reached around 12%. Fidelity also reported that since 2009 more participants have increased their contributions to their 401(k) than those who decreased their contributions. The increase in company and participant contributions is a sign of increased confidence in the economic recovery.