Americans’ 401(k) Totals Just Reached a New Record. Don’t Celebrate Yet…
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Americans’ 401(k) Totals Just Reached a New Record. Don’t Celebrate Yet…

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The average 401(k) balance reached a record high of $91,300 at the end of 2014, Fidelity Investments reported Thursday.

That’s starting to sounds like real money. Even better, the average balance for employees in the plan for at least 10 years was $248,000.

So, is the retirement crisis over? Not so fast.

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Fidelity is the largest providers of retirement accounts and administers more than 20,000 company plans with 13 million participants. That’s a sizable slice of the American public, but it also represents the best possible slice when it comes to retirement planning: folks who participate in a company 401(k) plan and benefit from a company match.

Roughly one-third of all U.S. families have no money set aside for retirement, Federal Reserve data shows. This includes 19 percent of people aged 55 to 64.

Plus, looking at Fidelity’s average makes the number look higher. The median account size at Fidelity is just $24,600. That means there are a lot of high net worth accounts skewing the overall average far higher. Baby boomers, who are at or near retirement, are 36 percent of account holders, according to Fidelity.

The $91,300 record is also just 2 percent higher than a year earlier. That’s actually a pretty puny gain when you consider the Standard & Poor’s 500 index returned 14 percent in 2014 and an average of $9,670 was added to each plan (in a combination of employee and employer contributions) over the year. That implies that investors are either being very conservative with their 401(k) selections or are making mistakes trading in and out of stocks.

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Even among Fidelity’s A-plus group of 10-year 401(k) savers, plenty of them don’t have near enough money saved for retirement.

Many financial planners espouse the “4 percent rule,” which would mean you’d need to have $1 million saved by retirement to safely withdraw $40,000 your first year and make sure your next egg lasts 30 years. The average Fidelity account holder is a long way away from that kind of retirement security.

While reporting the record, Fidelity’s own commentary was appropriately subdued.

“We continue to see American workers take positive steps when it comes to saving for retirement," said Jim MacDonald, the firm’s president of Workplace Investing. "However, it's important to remember to take a long-term approach to retirement savings, and not react to short-term market swings.”

When it comes to America’s retirement picture, not all records are worth celebrating.

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