Fidelity 3rd Quarter Retirement Plan Results Released – Target Date Funds Excel

Fidelity Investments released their 3^rd quarter results for its 401(k) and Individual Retirement Account (IRA) analysis. Fidelity reports that balances are up across the board for both types of accounts and that gains are solid over the long-term. Fidelity credit target date funds for the steady balance increases. In addition the analysis found that health savings account (HSA) balances are increasing due to rising health care costs.

From the Fidelity report:

• Increased retirement account balances. The average 401(k) balance rose for the second straight quarter, up 2 percent from Q2 and 7 percent year-over-year. The average IRA balance increased 5 percent from Q2 and 6 percent year-over-year.

Average Balances
	Q3 2016	One year ago	5 years ago
401(k)	$90,600	$84,400	$64,300
IRA	$94,100	$88,800	$66,100

 

Further highlights from the study show that target date funds (TDF’s) account for 100% of the investment allocation for 44% of participants. Fidelity says that TDF’s contribute to higher returns because employees do not feel compelled to make investment changes due to short-term market fluctuations in the marketplace when using a TDF.

“Fidelity has always stressed that people should take a long-term approach to their retirement savings – it’s best to view this as a marathon, not a sprint,” said Jeanne Thompson, senior vice president, Workplace Investing, Fidelity Investments. “When the market gets shaky, it’s important to stay focused and to stick to the fundamentals of retirement savings: have a plan, make regular contributions and ensure your asset allocation is aligned with your objectives. All of these steps will put you in the best possible position to reach your retirement goals.”

Health Care Cost Concerns Drive a Significant Rise in Health Savings Accounts

Fidelity also saw a significant increase in the number of people using health savings accounts (HSAs) to cover current and future qualified medical expenses. In the past year, the number of HSAs provided by Fidelity grew 43 percent to 501,000, with an average HSA balance of $3,150.