[August 16, 2018]

Fidelity Q2 Retirement Analysis: Account Balances Rebound, While Auto Enrollment Continues to Drive Positive Savings Behavior

Fidelity Investments^®, one of the most diversified financial services companies with more than $7.0 trillion in client assets, today released its quarterly analysis of retirement savings trends, including account balances, contributions, savings behavior and details on workplace savings plan design. Highlights from Fidelity's Q2 analysis, which is based on more than 30 million retirement accounts, reveal:

• Average individual 401(k), 403(b) and IRA account balances bounce back from dip in Q1, show solid year-over-year growth. The average 401(k) balance increased to $104,000, just under the all-time high balance of $104,300 from Q4 2017. The average balance represents a one percent increase from last quarter and a six percent increase from one year ago. The average IRA balance increased to $106,900, almost a two percent increase from last quarter and almost a seven percent increase from Q2 2017. The average 403(b) account was $83,400, almost a two percent increase from Q1 2017 and a five percent increase year-over-year.

• Percentage of employees with a 401(k) loan drops to lowest level since 2009. The percentage of workers with an outstanding 401(k) loan dropped to 20.5 percent, the lowest percentage since it was 19.9 in Q2 2009. Among Gen X workers, who historically have the highest outstanding loan rate, the percentage dropped for the third straight quarter to 26.4. The percentage of new loans initiated dropped for the second straight quarter to 9.7, the lowest mark since Q1 2017.
• More millennials⁴ using IRAs for retirement savings. Among IRA holders, millennials continued to utilize both Traditional and Roth IRAs for retirement savings in Q2. The average IRA balance for millennials increased nine percent in Q2 2018 to $15,150, and number of millennials making contributions increased 19 percent over a year ago. Roth IRAs continued to be a popular investment option for millennials, as 75 percent of IRA accounts that received a contribution from a millennial in Q2 were Roth IRAs, representing more than two thirds (69 percent) of millennials' contribution dollars.
• Number of 401(k) and IRA millionaires continues to increase. The number of people with $1 million or more in their 401(k) increased to 168,000 at the end of Q2, an increase of 49,000 from Q2 2017. In addition, the percentage of 401(k) millionaires who are women increased to more than one in five (21 percent). Among IRA holders, the number of clients with $1 million or more in their account reached 156,000 at the end of Q2, 26 percent of which were women.

"The stock market's performance over the past several years has definitely helped retirement savers, but now would good time for investors to take a moment and make sure they are doing their part to meet their retirement goals," said Kevin Barry, president of workplace investing at Fidelity Investments. "Markets may go up and down, but there are a number of steps individuals can take, such as considering a Roth IRA, increasing your savings rate and avoiding 401(k) loans, which can play an important role in their long-term savings success."

10-Year Analysis Shows Positive Impact of Auto Enrollment on Savings and Participation

Fidelity's Q2 analysis also examines how auto enrollment (AE) has impacted savings behavior and plan design since 2008. As of the end of Q2, 33 percent of Fidelity's 22,600 401(k) plans auto enroll new employees, more than double the percentage (15 percent) that auto enrolled employees in 2008. And among the largest 401(k) plans (companies with more than 50,000 employees), 61 percent automatically enroll new employees.

• Employers are increasing the default savings rate in 401(k) plans. The average "default savings rate" - which is the percentage of pre-tax pay employers select for employees who are automatically enrolled in their 401(k) - rose to 3.9 percent in Q2 after five straight quarters at 3.8 percent. Among mid-sized companies with 25,000-50,000 employees, the average default savings rate increases to 4.6 percent. In addition, the percentage of employers that default at 6 percent or more has more than doubled over the last decade - now almost 1 in 5 employers (19 percent) utilize a default savings rate of 6 percent or higher.
• Employees who are automatically enrolled stay in their plan. Average participation rates among plans with AE were 87 percent in Q2, compared with a participation rate of 52 percent among plans that do not auto enroll new employees. The impact of auto enrollment was especially significant among millennials - the participation rate for millennials within AE plans was 87 percent at the end of 2017⁵, more than double the participation rate for millennials in plans that did not auto enroll (41 percent).
• Employees who are automatically enrolled tend to save more. Since 2008, the average savings rate among employees who were automatically enrolled in their 401(k) has increased from 4.0 percent to 6.7 percent. Also, workers who are auto enrolled don't necessarily "set it and forget it" - over the past 10 years, nearly two-thirds (63 percent) of auto enrolled employees have increased their savings rate.

"As retirement savings plans continue to evolve to meet the changing needs of today's workforce, it's clear the one feature that has really had a positive impact on the retirement landscape over the past decade is auto enrollment," concluded Barry. "Auto enrollment positioned an entire generation of workers to build their retirement nest eggs."

For more information on Fidelity's Q2 analysis, please click here to access Fidelity's "Building Futures" overview, which provides additional details and insight on retirement trends and data.

About Fidelity Investments
Fidelity's mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $7.2 trillion, including managed assets of $2.6 trillion as of July 31, 2018, we focus on meeting the unique needs of a diverse set of customers: helping more than 27 million people invest their own life savings, 23,000 businesses manage employee benefit programs, as well as providing more than 12,500 financial advisory firms with investment and technology solutions to invest their own clients' money. Privately held for 70 years, Fidelity employs more than 40,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917

Fidelity Investments Institutional Services Company, Inc.,
500 Salem Street, Smithfield, RI 02917

National Financial Services LLC, Member NYSE, SIPC,
200 Seaport Boulevard, Boston, MA 02110

855677.1.0

© 2018 FMR LLC. All rights reserved.

¹Analysis based on 22,600 corporate defined contribution plans and 16.1 million participants as of June 30, 2018. These figures include the advisor-sold market, but exclude the tax-exempt market. Excluded from the behavioral statistics are non-qualified defined contribution plans and plans for Fidelity's own employees.
²Fidelity's IRA analysis is based on 10.2 million IRA accounts, as of June 30, 2018.
³Analysis based on 10,700 defined contribution plans, including 403(b), 401(a), 401(k) and 457(b) qualified plans, and 5.7 million participant accounts, in the tax-exempt market, as of June 30, 2018.
⁴ Generational start/end dates were chosen to align with Pew (News - Alert) Research. Boomers (born 1946 - 1964), Gen X (born 1965 - 1980), and Millennials (born 1981 - 1997).
⁵ Participation rates are measured on a yearly basis, and latest data available is as of year-end 2017.

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