Fidelity Investments manages over $5 trillion in investment accounts. According to their most recent analysis of Individual Retirement Accounts (IRA) and 401k accounts here’s what they found:
- The average IRA account balance for the 3rd quarter in 2016 was $94,100, up from $88,000 in 2015.
- The average 401k balance for the 3rd quarter in 2016 was $90,600, up from $84,400 in the previous year.
Now Is This A Good Or Bad Thing?
Great question. If you’re young then it’s fine and dandy, but if you’re about to retire then not so good. Let’s look at the math:
$90,000 in an IRA adding $5,500 per year (approx $114 per week) over 30 years compounding at 7% interest rate per year, you wind up with $1.2 million.
On the other hand if you take the same scenario but only have 10 years before retirement you end up with approx. $253k over 10 years.
The Moral Of The Story
Save! Save! Save! The sooner you start saving the better. Compound interest is your friend. Take advantage of it as soon as possible.