New data from Fidelity shows that employees are contributing more to their retirement accounts than ever, and one-third of workers have increased their savings rate in recent months.
The average employee now contributes 8.8% of their salary, with employers kicking in another 4.7%, for a total of 13.5%. "That's really close to the 15% we believe people should be saving," Katie Taylor, a vice president at Fidelity, told CNBC.
The strong economy has likely played a role in helping people save more, says Douglas Boneparth, a certified financial planner and founder of Bone Fide Wealth in New York City. "The markets are rising, and it creates a positive effect," he says. "People have had the opportunity to increase their savings rate."
Indeed, experts agree that you can see the biggest impact from making one small, important change: Get in the habit of not just making but upping your retirement contributions.
"Increasing your contribution rate, even by 1%, can make a big difference in your long-term retirement savings," says Kevin Barry, president of workplace investing at Fidelity Investments. "What may seem like a small amount today can have a significant impact on your account balance in 10 or 20 years."
Money invested now has the best chance to increase with time. That's why it's also important to start saving as soon as possible. "Millionaires are made in their 20s and 30s, not their 50s and 60s. The reason being, they have decades of compounding growth," Fred Creutzer, president of Creutzer Financial Services in Maryland, recently told Grow.
Other numbers in the Fidelity report point to the potential rewards of consistent saving: The tally of "401(k) millionaires," or workers with a balance of at least $1 million, hit a record high. Roughly 196,000 people have achieved that goal, an increase of 17% from last year.
Fidelity recommends that you save about 15% of your income for retirement, between your contributions and what, if anything, your employer adds. Here are three things you can do:
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