When it comes to interest, don’t take your time. Start doing this now so you can retire in style.
With each passing day of stock market volatility, retirement savers have more to lose — a lot more, in fact.
The number of Fidelity 401(k) savings accounts with a balance of $1 million or more jumped to a record 150,000 in the fourth quarter, up from 93,000 a year earlier.
And for the first time, average retirement savings balances have hit six figures, according to the latest quarterly report by Fidelity Investments. The average 401(k) balance reached $104,300, while the average IRA balance was as high as $106,000 in the fourth quarter of 2017, Fidelity found.
Number of 401(k) millionaires
Women, in particular, are making significant strides when it comes to savings. The percentage of female 401(k) millionaires doubled in the past dozen years, Fidelity found, climbing to 20% in 2017 from 10% in 2005.
Nearly 3-in-10 savers increased their contribution rate over the last year, Fidelity said. The average 401(k) contribution rate is now 8.6% as of the fourth quarter, the highest percentage in almost 10 years.
While the increase is due, in part, to the market run-up, recent market swings should not deter savers, said Jeanne Thompson, a senior vice president of Fidelity Investments.
“The first piece of advice, especially for retirement savers, is not to have a knee-jerk reaction,” she said. “Saving for retirement is a marathon, not a sprint, and you want to ride the highs and lows.”
Three tips to grow your 401(k)
Continue to contribute, Thompson advised, but if you’re no longer comfortable managing the 401(k) yourself, “consider opting in to a target date fund or managed account,” she said. “That can help determine the right amount of equities, bonds and cash.”
As a rule of thumb, Thompson recommends saving 10 times your income by retirement age, in which case, “a million is a good savings target for someone earning $100,000,” she said.
More from CNBC personal finance:
This is not the time to go to cash, advisors say
Here’s your safe haven from market volatility
Half of retirees have a nice ‘problem’ to tackle
Here’s how you can put off retirement, just like Warren Buffett
Here are five key tips from people who became millionaires at a young age and people who have studied hundreds of self-made millionaires.