Finance
401(k) balances hit second highest on record: Fidelity
Ramsey Solutions financial expert George Kamel weighs in on Americans working past retirement age and provides advice for investors.
Balances for 401(k) retirement accounts hit the “second-highest average on record” in the final quarter of 2024, according to new data from Fidelity Investments.
The financial services company found in its newly-released fourth-quarter retirement analysis that balances for that type of retirement plan averaged $131,700.
That figure marked a jump of 11% year-over-year, according to Fidelity.
Close up of a 401(k) statement with a pie chart indicating asset allocation.To see more of my financial images click on the link below: (iStock / iStock)
Compared to 2024’s third quarter, however, average balances for 401(k)s posted a 0.5% decline, the analysis showed. The third-quarter was when 401(k) plans notched their “highest average on record” for balances, with an average of $132,300.
The rate at which 401(k) retirement plan holders socked away money inched up year-over-year to 14.1% in the fourth quarter, according to Fidelity.
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Similar to 401(k)s, average balances for two other popular retirement vehicles – IRAs and 403(b)s – saw small declines of 1% from the third quarter but showed year-over-year increases.
Fidelity pegged the average balance for 403(b) accounts at $117,800 in the fourth quarter, up 11% compared to a year ago.
Meanwhile, IRA accounts held average balances of $127,543. That’s an increase of 8% from the fourth quarter of 2023, according to the report.
A senior couple using a laptop to help organize their retirement plans. (iStock)
Fidelity’s fourth-quarter analysis included over 50 million retirement accounts.
Overall, the financial services company said people building nest eggs “experienced a year of positive growth” in 2024.
Retirement contribution rates went up for almost 40% of those saving for their golden years, Fidelity also reported. On average, the increase was 2.9%.
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“As we have for several quarters now, we observed upwards savings trends in Q4. This is encouraging news and is particularly important for many Gen X savers, who are able to make catch-up contributions,” Head of Fidelity Wealth Roger Stiles said in a statement. “This is an important consideration as the April tax deadline approaches where investors may be able to contribute to an IRA for potential tax deductions for 2024.”
The deadline for individual tax return filing is April 15, according to the IRS.
Fidelity also highlighted the retirement saving efforts of Generation X – people born between 1965 and 1980 – in its latest analysis.
When it came to IRAs, Gen Xers boosted their average contributions 16% year-over-year, according to the financial services company.
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Meanwhile, Gen Xers that have been putting money in 401(k) accounts regularly over 15 years achieved average account balances of $589,400, a jump of 18% from the same period last year, per Fidelity.
A person puts money into a retirement savings jar. (iStock / iStock)
Americans think $1.46 million is the amount of money necessary to experience a comfortable retirement, according to a study released by Northwestern Mutual last year.
The Transamerica Center for Retirement Studies found in an August 2024 report that the median age of retirement for middle-class retirees was 62.
‘The Big Money Show’ co-hosts discuss buy now, pay later spending options and the impact it will now have on your credit score.
Small, everyday purchases like a meal from DoorDash are now able to be financed through eat now, pay later options — a practice that some experts deem “predatory.”
“You’ve got to have enough sense to not follow the urge to finance a taco, okay? You have got to be an adult,” career coach Ken Coleman told “The Big Money Show,” Wednesday.
“This is predatory, and it’s going to get a lot of people in deep trouble.”
RISKS OF BUY NOW, PAY LATER: ‘TICKET TO OVERSPENDING,’ EXPERT SAYS
DoorDash and Klarna are now partnering up to extend buy now, pay later options to consumers. (Reuters, Getty / Getty Images)
Financial wellness experts are continuously sounding the alarm to cash-strapped consumers, warning them of the devastating impact this financial strategy could have on their credit score as some lenders will begin reporting those loans to credit agencies.
Consumers may risk getting hit with late fees and interest rates, similar to credit cards.
“So your sandwich might show up on your FICO score, especially if you pay for it late,” FOX Business’ Jackie DeAngelis explained.
EXPERTS WARN HIDDEN RISKS OF BUY NOW, PAY LATER
Major players like Affirm, Afterpay, and Klarna have risen to prominence at a time when Americans continue to grapple with persisting inflation, high interest rates and student loan payments, which resumed in October 2023 after a pause due to the COVID-19 pandemic.
Ramsey Solutions personal finance expert and ‘The Ramsey Show’ co-host George Kamel discusses the ‘buy now, pay later’ craze and the trend that celebrates the financial benefits of being childless.
“The Big Money Show” co-host Taylor Riggs offered a different perspective, suggesting that company CEOs have a “duty” to attract as many customers as they want.
“Unfortunately for me, this always comes down to financial literacy — which I know is so much in your heart about training people to save now by later,” she told Coleman, who regularly offers financial advice to callers on “The Ramsey Show.”
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Coleman continued to come to the defense of financially “desperate” consumers, arguing that companies are targeting “immature” customers.
“I’m for American businesses being able to do whatever they want to do under the law. That’s fine. But let’s still call it what it is: it’s predatory, and they know who their customers are,” Coleman concluded, “And I’m telling you, they’re talking about weak-minded, immature, desperate people.”
FOX Business’ Daniella Genovese contributed to this report.
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