Retirement Account Balances Hit Their Highest Levels in Nearly Two Years

KEY TAKEAWAYS

• 37% of workers increased their retirement savings contribution in 2023, boosting average account balances to their highest levels in nearly two years.
• Fidelity recommends that individuals save at least ten times their income by age 67, or 15% of their annual pre-tax income each year, to retire comfortably.
• As of year-end 2023, the average 401(k) balance of Gen X workers had reached more than half a million dollars ($501,000).

Improved market conditions and consistent contributions boosted average retirement account balances to their highest levels in nearly two years at the end of last year, with 37% of workers increasing their retirement savings contribution in 2023, according to new data from Fidelity Investments.

“When it comes to matters like market stability and economic events, 2023 gave us the highs of the highs, and the lows of the lows, but encouragingly, many retirement savers took the long view and stayed the course through it all, which is the type of commitment that can lead to a secure financial future,” said Sharon Brovelli, president of Workplace Investing at Fidelity Investments.

Positive Saving Behaviors Aid Retirement Goals

According to Fidelity, these “positive saving behaviors” are important to help workers reach their retirement goals. By the end of 2023, 78% of 401(k) savers were contributing at a rate high enough to secure the full matching contribution offered by their employer. An impressive 48% of workers proactively increased their contribution rates, as opposed to relying on automatic increases, in the fourth quarter of 2023.

Fidelity recommends that individuals save at least ten times their income by age 67, or 15% of their annual pre-tax income each year, to retire comfortably. As of year-end 2023, the average balance of Gen X workers in their 401(k) plans had reached more than half a million dollars ($501,000), demonstrating the benefits of saving consistently, contributing enough to receive an employer match, and planning for retirement for the long haul.

For Gen X and Millennials, the Struggle Is Real

This is good news for workers striving towards a comfortable retirement, but Gen Xers may be running out of time with retirement looming around the corner. According to a Bankrate survey released in September, 57% of Gen X workers don't believe they will be able to save enough to retire comfortably.

But Gen X isn’t alone in their retirement concerns. Millennials are also struggling to get a foothold with the burden of student debt, the shift to 401(k) plans, and later retirement ages. Fortunately, unlike Gen X, these younger households have more time to make up the saving gap.