Strong growth for stocks on Wall Street this year have bolstered gains for savers with retirement accounts, the Associated Press reports. The average 401(k) plan balance stood at $127,100 at the end of the second quarter, an increase of 13% from the same period last year, according to data from Fidelity Investments drawn from 24 million accounts.
The average balance in the April–June quarter was up just 1% from the first three months of the year, when the average 401(k) balance jumped 16.4% from a year earlier.
The median 401(k) plan balance was just $29,200 at the end of the second quarter, an increase of 17% from a year earlier. The median figure tends to skew lower than the average because workers who recently enrolled into a 401(k) plan but haven’t had time to build up a balance.
Individual retirement accounts, or IRAs, also rose. The average balance was $129,200 by the end of the second quarter, an increase of 1% from the first quarter and up 14% from the second quarter last year, Fidelity said.
The retirement savings plans’ gains came as the major stock indexes crushed multiple record highs amid a wave of enthusiasm over artificial intelligence developments that fueled demand for shares in Big Tech stocks, including chipmaker Nvidia, Meta Platforms, Microsoft, and Amazon.
The benchmark S&P 500 index rallied to a roughly 15% gain through the first six months of the year. It has since added another 2.4% and is up about 17% as of Wednesday.
The savings rate, or how much savers set aside from their pay combined with contributions from their employer, of 14.2% also helped push up 401(k) plan balances.
Some 18.3% of employees with a 401(k) plan had a loan outstanding on their retirement account balance in the second quarter, Fidelity said. That’s up from 17.2% in the same quarter last year.
