Boomers Are Leading the Way for Retirement Savings in 2023, According to Experts
If there’s one thing that we know about retirement savings, it’s that too few Americans have enough of it. A recent GOBankingRates survey found that most Americans have less than $50,000 saved for retirement, and more than one-third (36%) have less than $10,000 saved.
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But not all Americans are created equal when it comes to retirement savings. Older workers tend to do a better job of it than their younger cohorts, according to some experts — partly because they earn higher incomes. The latest retirement analysis from Fidelity Investments found that baby boomers still in the workforce “continue to save at the highest levels.”
The 401(k) savings rate for boomers climbed to 16.7% during the 2023 first quarter, according to Fidelity. That was up from 16.5% the previous quarter. In comparison, Gen Z saving levels rose to 10.5% in Q1 from 10.2% the previous quarter.
Those numbers align with the GBR survey, which found that Americans ages 25 to 34 are the most likely to have $10,000 or less saved for retirement, with 38% reporting that their retirement savings fell into this range. Among those ages 35 to 44 and 55 to 64, 37% have $10,000 or less; 36% of Americans ages 18 to 24 have $10,000 or less; 35% of Americans ages 45 to 54 have $10,000 or less; and 31% of those ages 65 and older have $10,000 or less.
The overall 401(k) savings rate during the 2023 first quarter improved to 14% from 13.7% in Q4 2022 and 13.8% in Q3 2022, according to Fidelity. The most recent data show a return to the savings rate seen at “the start of market volatility” during the 2022 first quarter and came in just below Fidelity’s suggested savings rate of 15%, including both employee and employer contributions.
“We are encouraged to see positive gains for retirement savers, evidenced through rising account balances, improved savings rates, and a commitment by employers — including small businesses — to help employees prepare for the future,” Kevin Barry, president of Workplace Investing at Fidelity Investments, said in a May 25 news release.
Other highlights from Fidelity’s Q1 2023 analysis include the following:
The average IRA balance was $109,000 in Q1 2023, a 5% increase from both the previous quarter and pre-pandemic levels five years earlier.
The average 401(k) balance increased to $108,200, up 4% from Q4 2022 and 5% from five years earlier.
The average 403(b) balance rose to $97,900, up 6% from the previous quarter and 16% from five years earlier.
The average 401(k) employer contribution, which includes profit sharing and matching contributions, reached a record 4.8% in Q1 2023.
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In addition to higher contributions from employers, account balances were helped by improving market conditions during the first quarter, Fidelity noted.
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This article originally appeared on GOBankingRates.com: Boomers Are Leading the Way for Retirement Savings in 2023, According to Experts
