401(k) Savings Inches Upward

But workers remain concerned that they aren’t saving enough for retirement.

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The average 401(k) balance rose to $74,900 in the first quarter 2011, up from $71,500 at the end of 2010, and the highest amount recorded since this data began being tracked in 1998, according to recently released Fidelity data. Fidelity 401(k) balances have grown 12 percent since last year and 58 percent since 2009.

[See Have 401(k)s Recovered Yet?]

About two thirds of the increase is due to market gains and one third is from new 401(k) contributions, according to Fidelity’s analysis of 16,500 401(k) plans with 11 million participants. Nearly 10 percent of 401(k) participants increased the amount they are saving so far this year, up from 7.6 percent of savers who were able to boost their savings rate a year ago. Only 3.2 percent of retirement investors are now saving less than they did last year, about the same as the 3.5 percent of people who reduced or eliminated their contributions in the first quarter of 2010. The average deferral rate is 8.2 percent of pay, an amount that has remained consistent over the past 2 years.

Retirement investors who have continuously saved in the same 401(k) plan for a decade or more generally have the highest balances. Investors with 10 or more years of 401(k) participation had an average balance of $191,000 on March 31, 2011. And 10-year participants ages 55 and older had an average balance of $233,800.

[See 10 Essential Sources of Retirement Income.]

However, despite this uptick in savings, most Americans still don’t think they are saving enough. A Gallup poll conducted in April found that the majority of workers (53 percent) do not think they will have enough money to live comfortably in retirement, up from about a third (32 percent) of workers who felt this way in 2002. And an Employee Benefit Research Institute survey released in March found that most workers think they are a lot (40 percent) or a little (30 percent) behind schedule saving for retirement. The proportion of workers who feel like their retirement savings plan is on track has declined from 37 percent in 2005 to 21 percent in 2011. Only 8 percent of workers think their retirement investments are performing ahead of schedule.

[See 7 Reasons Americans Can’t Save for Retirement.]

Many workers continue to dip into their retirement savings early. Some 22.1 percent of 401(k) participants had an outstanding 401(k) loan on March 31, about the same proportion of people who had a loan at the end of 2010 (22.5 percent), Fidelity found. 401(k) loans are much more common than hardship withdrawals, which just 2.2 percent of 401(k) participants took over the past year.

Twitter: @aiming2retire