The latest retirement analysis from Fidelity Investments reveals that the average retirement account balances for Americans have reached six figures. The average balances in IRAs, 401(k)s, and 403(b)s have increased for the third quarter in a row, reaching $113,800, $112,400, and $102,400 respectively. However, this doesn’t necessarily mean that saving for retirement has been easy, as many Americans struggle to save money in today’s economic climate. In order to fund your future, CNBC Select suggests several strategies including automating your retirement savings by setting up an autopay system, maximizing your employer’s 401(k) match, using vehicles like traditional or Roth IRAs if your employer doesn’t offer a 401(k), starting small but early, and leaving your retirement savings untouched in investment accounts.
Everyone’s retirement journey is unique, but understanding the average savings of Americans can serve as motivation. It is recommended to pay your future self first by automating your retirement savings. Setting up an autopay system that deducts a portion of each paycheck into a retirement fund before it reaches your bank account can prevent you from spending that money. Meeting your employer’s 401(k) match is another way to boost your retirement savings. For those without access to a 401(k), traditional or Roth IRAs can be used to supplement retirement savings. Roth IRAs, in particular, are popular because contributions are made with after-tax dollars, and withdrawals during retirement are tax-free.
It’s important to start saving for retirement as early as possible, even if you start small. Compound interest allows your money to grow over time, so starting early can have a significant impact on your savings. Additionally, it is advised to leave your retirement funds alone and avoid constantly monitoring the stock market. Holding investments for a longer period of time can maximize returns. For individuals who want to be more actively involved in the markets, robo-advisors like Betterment and Wealthfront are popular choices. They offer low annual advisory fees and help create investment strategies based on risk tolerance. Ultimately, understanding average retirement account balances can provide insight and motivate individuals to take action in saving for their retirement years.