Retirement account balances, which fell at the start of the year due to market volatility, bounced back in the second quarter, according to the latest data from Fidelity Investments, the nation’s largest provider of 401(k) savings plans.
The average 401(k) balance jumped 8% from a year earlier to $137,800, a record high, Fidelity found.
The average individual retirement account balance also rose 5% year over year to $131,366.
Number of 401(k), IRA millionaires hit all-time highs
The rebound in account balances helped boost the number of 401(k) millionaires to an all-time high.
The number of 401(k) accounts with a balance of $1 million or more jumped to 595,000 as of June 30, up 16% from the first quarter, according to Fidelity.
The number of IRA-created millionaires also increased by 16% to a record 501,481.
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Positive savings behaviors were key to better outcomes, said Mike Shamrell, Fidelity’s vice president of thought leadership.
The majority of retirement savers continued to make contributions, even during periods of market turbulence, Fidelity found. The average 401(k) contribution rate, including employer and employee contributions, largely held steady at 14.2%, just shy of Fidelity’s suggested savings rate of 15%.
A great stretch for the major indexes also helped.
U.S. markets came under pressure after the White House first announced country-specific tariffs on April 2, causing some of the worst trading days for the S&P 500 since the early days of the Covid-19 pandemic.
However, markets then rebounded from those losses. Savers who “stayed the course, continued to contribute at healthy levels and didn’t make significant changes to their allocation, were able to take advantage of the positive market conditions that followed,” said Shamrell.
As of Wednesday’s close, the S&P 500 was up about 10% year to date, the Nasdaq had gained more than 11% and the Dow Jones Industrial Average rose roughly 6%.
“We have seen a lot of resilience out of the market despite a lot of volatility,” said Tim Maurer, a certified financial planner and the chief advisory officer at SignatureFD, based in Atlanta.
“Markets have a positive rate of return,” said Maurer, who is also a member of the CNBC Financial Advisor Council. “Any asset class that has a positive rate of return should regularly hit new highs.”