Do you want the good news first about the state of your retirement savings? Or the bad news?
The good news, according to a Fidelity Investments analysis of the third quarter of 2018, is that average retirement account balances have reached record highs. As of Sept. 30, those balances are:
Those averages are nearly double from where savers were a decade ago, at the start of the financial crisis. The average employee contribution reached its highest level since late 2006, at 8.7 percent, and average rates among women hit a record of 8.5 percent.
"Now, more than ever, we're seeing increases in engagement when it comes to saving and investing for retirement," said Meghan Murphy, a vice president with Fidelity Investments.
The bad news is that investors may find their retirement current balances look somewhat less record-setting after recent volatility. The stock market lost nearly $2 trillion in value during October, according to S&P Dow Jones Indices analyst Howard Silverblatt.
Nor do high average balances necessarily mean the typical investor is on track to a comfortable retirement. A recent report from the Stanford Center on Longevity found that median savings rates (including any employer contributions) are well short of what people should be socking away. (See charts below.)
In other words, don't be complacent about those records. Even when the news is, broadly, that savers are doing well, take the time to check your plan and make sure you're on track, said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York.
"I would feel terrible if someone thought they were doing well because everyone is doing well," he said. "The worst thing you could do is to be under the impression you're doing well when you have no idea how you're doing."
Fidelity's analysis does point to a few trends that indicate consumers may be making strides toward success in their retirement accounts.
For one, more employees are using target-date funds in their portfolios, with 50.4 percent of 401(k) savers putting all their assets in one. Target-date funds invest in a diversified mix of underlying stock and bond funds, with the allocation becoming gradually more conservative as your retirement approaches — although they can still take a beating in a down market.
A decade ago, 1 in 4 savers had a portfolio that was dramatically under or over exposed to equities, according to Fidelity — putting them at greater risk of coming up short. That includes 16 percent whose entire account was in stocks and 10 percent who had none.
"Today, it's only about 10 percent who are one extreme or the other," Murphy said. "We've seen a big correction there, a helping hand offered by products like target-date funds."
The Fidelity report also points to the power of a long-term savings strategy. Average balances for savers who have been in their workplace plan for 10 years run $305,400, nearly five times the average balance a decade ago; among those in their plan for 15 years, the average is $400,300, a more than eight-fold increase from 15 years ago.
"There was a lot of worry that took place during the market downturn," said Murphy. "The vast majority of people stayed the course and remained invested, and that paid off."
In fact, a record number of savers have amassed $1 million or more in their retirement account: 401(k) millionaires now number 187,400, a 41 percent increase from last year, while the number of IRA millionaires is up 25 percent over the same period, to a total 170,400. Those 401(k) and IRA millionaires typically have a savings tenure of 30-plus years, meaning they have been through plenty of market ups and downs, said Murphy.
"[Millionaire status] is actually is quite achievable in your retirement plan if you start early, save consistently and invest appropriately, " she said.