Booming stocks helped create record retirement savings and contributions

The soaring stock market in the second quarter helped boost Americans’ retirement savings to new highs and persuaded investors to contribute more than ever to their next eggs.

The average retirement account balances of more than 30 million IRAs, 401(k)s, and 403(b)s at Fidelity Investments increased to record levels in the second quarter for the third consecutive quarter.

For IRA accounts, the average balance was $134,900, marking a 4% gain from last quarter; 401(k) balances grew 4% to $129,300, and the average 403(b) account balance increased to a record $113,300, an increase of 6% from the previous quarter.

“In the midst of another wave of uncertainty, it's really encouraging to see just how well Americans are saving for the long term,” Jessica Macdonald, vice president of thought leadership at Fidelity, told Yahoo Money. “They're [also] increasing their savings rates into their retirement accounts and we're seeing a downward trend of outstanding loans from those accounts.”

Overall, the average 401(k) employee savings rate reached a record 9.3% in the quarter. Over the last year, more than one in three of 401(k) savers have increased their savings rate, while only 7% of workers decreased their 401(k) contribution since a year ago.

The enthusiasm for saving spanned generations in the second quarter when the Standard & Poor's 500 index returned 8.2%.

For instance, Gen Zers hold 795,000 accounts on the Fidelity platform, which is a 10% jump from the beginning of this year. Millennials have increased their savings rate by 43% over the past year.

“It's great that so many young people are able to benefit from the market performance by simply taking advantage of a benefit offered by their employer,” she said. “It's not just cryptos or single stocks.”

With the bulk of their professional years ahead of them, Macdonald pointed out that younger generations are “seeing the benefits of getting in now” and “letting the money work for them over the years.”

Baby boomers are using their remaining earning years to boost their retirement contributions, the data showed. A record 18.2% made a “catch-up” contribution last quarter, and of that, nearly 3 in 5 made the maximum catch-up 401(k) contribution of $6,500 by the end of last year. The average 403(b) contribution rate for baby boomers also increased to 10.9% in the second quarter.

The average IRA contribution amount for baby boomers increased 17% last quarter to $3,570, and the total number of IRA contributions among boomers increased 57% when compared with the same quarter last year.

Macdonald partly attributes the groundswell of additional savers to retirement savings auto-enrollment offered by employers.

“[Employers] are enrolling employees automatically,” she said, adding that some are offering auto-increases for willing employees to annually contribute larger percentages as their take-home pay increases.

“There's a lot of benefit to that actually of the employees that have been auto-enrolled,” adding that only 91% of participants opt out. “Sometimes it's just a matter of getting over that hump and getting signed up, which is the most important part.”

Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.

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