(Bloomberg News) Average balances of 401(k) retirement plans were about 62 percent higher as of March 31 than the first quarter of 2009, when the stock market reached a 12-year low, according to Fidelity Investments.
The average account balance in the U.S. was $74,600 compared with $46,200 at the end of the first quarter of 2009, according to a report released today by the Boston-based mutual- fund manager. The Standard & Poor's 500 Index fell about 40 percent in the 12 months ended March 31, 2009.
The stock market recovery and renewed commitment to saving has driven the increase, Beth McHugh, vice president of market insights for Fidelity, said in an interview yesterday.
"We're seeing the benefits of strong markets," said McHugh. "We saw the account balance growth more attributable to the market than contributions."
Stock market performance accounted for about 80 percent of the average $5,500 increase in the first quarter of 2012 compared with the prior quarter, while the remaining 20 percent was from employer and worker contributions, Fidelity said. The S&P 500 rose about 12 percent in the first three months of this year.
The growth in the accounts comes as Americans continue to say they're worried about outliving their savings and Congress weighs limiting contributions or reducing the tax advantages of the plans.
Workers' confidence in their ability to retire remains historically low, with about 14 percent saying they were very certain they'd have enough to live on comfortably, according to the Employee Benefit Research Institute, a Washington-based nonprofit that studies employee benefits, in a March survey. That compares with a high of 27 percent in 2007.
The U.S. House Ways and Means Committee held a hearing in April on retirement savings as Congress seeks to overhaul the nation's tax code and reduce the deficit. Proposals to alter the benefits have included reducing the amount that can be contributed or replacing deductions for savings with credits. Tax incentives for retirement accounts cost the government more than $130 billion in revenue this year, according to the Joint Committee on Taxation.
A 401(k) plan generally lets employees defer a portion of their wages to the account on a pretax basis. Contributions are limited to $17,000 for 2012 and those age 50 or older may set aside an additional $5,500, according to the Internal Revenue Service.