Fidelity: Average 401(k) balance nearly doubles since market low of 2009

Fidelity Investments, the Boston-based financial services company that manages many corporate retirement plans, said Thursday that the average 401(k) balance of people with Fidelity retirement plans was $89,300 at the end of the fourth quarter, up 15.5 percent from a year earlier.

A big factor in that jump was positive momentum in the stock market last year.

The fourth-quarter average was nearly double what is traditionally considered the market low of March 2009 when that average was $46,200, Fidelity said. For people 55 and older who are still working, the average balance was $165,200.

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Fidelity manages the retirement plans for about 21,200 US companies. Collectively, 12.5 million of those companies’ employees participate in a Fidelity 401(k) plan.

There was one cause for concern in Fidelity’s fourth-quarter snapshot: Of employees with a Fidelity plan, 35 percent of those who left a job last year cashed out their 401(k) balances. Cashing out retirement plans early can have negative financial consequences later on.

“People with a 401(k) who change jobs have a critical decision to make: take the quick cash, or keep the balance in their existing plan or roll it over into another tax-advantaged account, two options that may provide them considerable income in retirement,” James MacDonald, president of Workplace Investing at Fidelity, said in a statement.  “Fidelity knows this decision isn’t easy.  Everyone’s personal financial situation is different, and there are times when a person must have access to cash.  However, we urge all investors – especially young savers with years of potential investment gains – to keep their 401(k) savings working for them in a tax-advantaged retirement account when changing jobs.”