If you were old enough to remember the Great Recession of 2008, you likely watched the stock market plummet, had a hard time finding a job and saw your parents’ retirement savings evaporate, in many cases, overnight. But 10 years after the crash, the economy is looking better than ever, and so are retirement account balances.
Average retirement account balances reached record highs this month and have nearly doubled in value over the past decade, according to a recent report from Fidelity Investments. The average 401(k) balance is at an all-time high of $106,500, and the average IRA balance increased to $111,000.
How do retirement savings compare to last year?
|Q3 2018||Q3 2017||Q3 2008|
In fact, there are now 41% more 401(k) and IRA millionaires than there were last year, with 187,400 people sitting on seven-figure balances in their retirement accounts.
Millennial women are doubling down on investing
Retirement account balances will typically be a lot higher if you’re nearing the end of your career. But that doesn't mean your parents and their generation are the only ones with cause to celebrate.
Contribution rates for female investors reached a record high of 8.5% of their salaries. And Fidelity reports millennial women are leading the charge, with this group increasing their IRA contributions by 19% since last year.
How do your retirement savings stack up?
While all of this is great news, only 38% of millennials currently contribute to a retirement account, and they don't start saving until age 36, according to a 2018 TD Ameritrade study.
The record levels of student debt graduates carry may help explain why employees aren’t thinking about retirement, let alone retirement savings. But it's important for millennials to understand the sheer power of compound interest and how investing a few years earlier can reshape their retirement prospects.
If you're less than 10 years into your career, instead of comparing how much is in your retirement account to the table above, focus on your retirement rate and investing as early in your career as possible.
Most experts advise investing 10% to 15% of your salary into a retirement account in order to have enough to retire. But if there’s any lesson to be learned from how Americans have recovered from the Great Recession, it’s that it’s never too early or too late to start saving towards your retirement goals.