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So do you have $300,000 or more in your 401(k)?

Sure, it sounds like an enormous amount of money. Especially when you consider that about one out of four non-retired adults have no retirement savings or pension whatsoever, according to the latest Federal Reserve report on the Economic Well-Being of U.S. Households. Of the non-retired age 60 and older, 13% have no retirement savings or pension.

But if you've been working a while — and saving over time — the odds go up that you could have good money in retirement savings.

The average 401(k) plan balance hit $305,900 as of the second quarter among participants who have been in their 401(k) plan for 10 years in a row, according to the latest quarterly analysis of retirement savings trends released by Fidelity Investments. The average is based on a group of 1.6 million participants in Fidelity retirement accounts.

What's interesting: The latest average is more than five times the average balance of $59,900 for a similar group 10 years ago.

A big bull market for stocks, which began in March 2009 and has kept going, surely helps.

 

Who's doing well in their 401(k) plans?

Six-figure 401(k)s tend to be concentrated by ages for those who have been consistently saving in their 401(k) for 10 years straight.

n For baby boomers in that group, who are currently ages 55 through 73, the average balance was $365,800 (with 697,000 Fidelity participants).

n For the Gen-X group, who are currently ages 39 through 54, the average 10-year balance was $278,600 (with 802,000 in that group).

n For millennials, who are ages 23 through 38, the average 10-year balance was $135,100 (with 117,000 Fidelity participants).

Overall, the average 401(k) balance was $106,000 based on 17.1 million Fidelity accounts in the second quarter. That was up about 1.9% from the second quarter in 2018.

 

How many 401(k) millionaires are there?

Much of the big excitement, of course, is triggered by the notion that some people are actually hitting a million bucks in retirement savings.

An all-time high of 196,000 people had $1 million or more in their 401(k) plans in the second quarter. That's up from 180,000 at the end of the first quarter.

Most of the millionaires are baby boomers who are making decent money and they're aggressive savers who have consistently been saving for decades.

 

What will it take to get you to save more?

The trick with some of these numbers, perhaps, is to get people motivated to think that they too can see their 401(k)s one day add up to something.

Adults ages 45 to 59 tend to feel they're on track if they have at least $250,000 saved, according to research by the Federal Reserve.

A lot of data regarding savings is downright discouraging. Some work at jobs that don't offer any kind of retirement savings plans.

When people talk about significantly smaller average balances, they're including younger people who haven't been on the job for some time, said Katie Taylor, vice president of thought leadership at Fidelity Investments.

Yet when workers save for a decade, Taylor said, they've been able to build up to a more substantial nest egg as they move closer to retirement age.

Taylor noted that employees can benefit by increasing their regular contributions, as a percentage of pay, each year.

Run some of the online calculators, such as the Power of Small Amounts by Fidelity, to see how much saving an extra 1% each year can help.

Starting at age 25 with a salary of $50,000 — and a job with a 4% employer match on a 401(k) — someone could hit $661,000 in savings by age 67 if they consistently saved 4% a year. That amount could more than double to nearly $1.37 million if the employee increased the contribution by 1% each year to ultimately contribute 15% of pay, according to a Fidelity example. The scenario assumes a 1.5% increase in wages each year.

The latest Fidelity study showed that employee savings rates hit record levels in the second quarter of 2019, as nearly one-third of investors boosted their savings rate.

The average employee contribution rate climbed to a record 8.8% in the second quarter — up nearly a full percentage point from 10 years ago.

The bulk of that added savings took place because some employers will automatically increase the employee's own contributions over time. Yet 40% of the employees boosted their savings on their own.

"People do understand the importance of 40(k)s," Taylor said. "Many companies don't have pension plans."

Nearly two-thirds of workers between ages 26 and 64 are participating in 401(k) plans either directly or through a spouse, according to a study released in August by the Investment Company Institute.

Yet, the trade group notes that the participation rate jumps up to more than three-quarters if younger and lower-income workers — those who are least likely to be able or want to save for retirement — are removed from the analysis.

When most people watch the wild swings on Wall Street these days, they're doing so because they're concerned about what could happen to the big number on their 401(k) statements.

At year-end 2016, data indicate that more than nine in 10 participants in 401(k) plans held at least some stocks through their plans, according to research by the Investment Company Institute.

Nearly half of those savers had more than 80% of their 401(k) plan account balance invested in stocks, Only 8% of 401(k) participants had nothing in stocks, according to that research.

 

Many people, of course, don't feel all that secure about their retirement savings.

What's holding people back? The usual suspects:

Student loan debt

Among 25-year-old to 35-year-old workers who are not saving for retirement, 39% say they are prioritizing their student loan payments, according to a TIAA-MIT AgeLab Study released this summer.

Younger workers aren't the only ones who are challenged by student loan debt. About 43% of the parents and grandparents who took out student loans for others say they will increase their retirement savings once the student loan is paid off.

Women in particular described the struggle of sacrificing their own financials security to put their children's education first.

Borrowing money from a 401(k) plan

While the goal is to save money to cover expenses during your 60s or 70s when it may be harder to work full time, it's often tempting to tap into 401(k) dollars earlier.

The most common reasons for taking out a loan, according to Fidelity's data: Paying down or paying off high-interest credit card debt (31%); making home improvements or repairs (24%); buying a home or refinancing a mortgage (21%) or paying outstanding bills (19%).

About 20% of Fidelity participants had loans outstanding from their 401(k) plans in the second quarter of 2019.

About 24% of those who take out a loan decrease the amount they're regularly setting aside in the 401(k) or stop saving in the 401(k) entirely to offset the loan repayment, according to Fidelity research.

Lack of cash and commitment

If you aren't saving consistently — and increasing how much you save out of each paycheck toward retirement — you're unlikely to get anywhere close to a million dollars in retirement savings.

Remember, the big numbers apply to those who kept saving year after year, according to the Fidelity research. Making small changes — say adding an extra 1% in savings toward retirement each year — can generate some big numbers over time.

Just because someone isn't saving in a retirement plan today doesn't mean they can't or won't change course later in their careers. Some may rationally choose to delay saving for retirement until they're earning more money or have taken care of other priorities, such as buying a home, according to the ICI research.

For younger savers the 401(k) is often the main source of investing. Millennial households owning mutual funds are more likely to hold funds only inside employer-sponsored retirement plans, according to ICI data.

In 2018, 47% of millennial households owning mutual funds held their funds only through employer-sponsored retirement plans, compared with 33% of baby boom households owning mutual funds.

Over time, some workers do decide to ramp up their savings rates when they're making more more or feel more financially stable. Some might even get motivated when they realize that they could one day hit a quarter-million or more in that 401(k).

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