Retirement savings rates reached record levels in the first quarter of 2017, according to new data from Fidelity Investments.

The total savings rate for 401(k) savers — which combines individual contributions plus employer contributions — reached a record 12.9% in the first quarter, topping the previous high of 12.8% in the first quarter of 2006. Fidelity also found that 27% of 401(k) investors increased their individual savings rate in the past year.

The number of individuals contributing to an IRA jumped 17% in the first quarter compared to the same period a year ago, and there was a 38% increase in the amount of money being contributed.

“We do look at savings rate as an indication of where people are actually engaging with their retirement programs, be it IRA or 401(k),” says Beth McHugh, senior vice president of strategic media and communications for Fidelity Investments. “The fact we saw an uptick in employee contributions to a record level is very encouraging.”

A percentage of the increase can be attributed to company automatic escalation programs that kick in during the first quarter of each year, McHugh says.

But, she adds, “we have also seen individuals increase on their own, which is also very encouraging.”

Millennials showed the greatest increase in retirement savings among the different generations, with a 42% increase in the number of accounts receiving contributions and a 51% increase in the amount of money contributed.

Retirement account balances reached record highs, in large part due to positive stock market performance and increased contributions, according to Fidelity. The average 401(k) balance was $95,500 during the first quarter, while the average IRA balance was $98,100.

A year ago, the average 401(k) balance was $87,600, and the average IRA balance was $89,300.

“The market is performing well and at an all-time high,” she says, noting that it also helps that “these contributions are an incredibly valuable component of these programs, especially over the long-term when there are ebbs and flows of the markets themselves.”

“I think there is optimism and people are encouraged by the economy,” she says.

When the economy is good and jobs reports are good, this is the time for retirement savers to establish an emergency savings account and start setting money aside for big purchases, like a new home or a child’s college expenses, along with saving for retirement.

“Now is the time to start talking to plan participants and investors about [sharing] in the goodness and [contributing to their] financial life and future,” McHugh says.

Fidelity Investments also saw a marked increase in the amount being contributed to health savings accounts during the first quarter.

“The HSA is a great example of the halo effect that happens,” McHugh says. “When you see people starting to save, they look for other savings vehicles. Health savings accounts are a convenient and tax-advantaged way to save money for health care expenses now and in the future.”

The number of employees who contributed to both a 401(k) and an HSA increased 21% between 2014 and 2016.

“Employees saving in an HSA aren’t cutting back on contributions to their 401(k), just the opposite: savings rates for employees with both a 401(k) and HSA are often higher (10.6% in 2016) than those saving in their 401(k) (8.2% in 2016),” according to Fidelity.

It also found that 88% of HSA participants who started contributing to their HSA maintained or increased their 401(k) savings after they enrolled in the health savings account.

“Health savings accounts and 401(k)s can contribute to an employee’s financial wellness, so it’s encouraging to see more employers and employees understand and embrace the complementary nature of these accounts,” says Kevin Barry, president, workplace investing, for Fidelity Investments.

As more employers offer financial wellness programs, employees are getting a better understanding about how saving for retirement and managing healthcare expenses go hand-in-hand.

The first step toward boosting HSA balances was to get more employers to offer them alongside high-deductible health plans. Now the challenge is to get employees who have access to an HSA, to contribute to it, McHugh says.

Many individuals, including their employers, don’t realize that any unused money in a health savings account can be reinvested for growth into mutual funds and even target-date funds, she says.

It takes time for people to realize these different savings tools are available to them and much of that has to do with education and word of mouth.

“The most encouraging signs are that people are saving and realizing the importance of their own contributions to help complement Social Security,” McHugh says.

It’s important for savers to realize that they shouldn’t put all of their savings money in one pot. It is important, in terms of financial wellness, for people to invest not only in their 401(k) and IRA but also have some personal savings set aside. That way, if they need to take out a loan, they don’t withdraw that money from their retirement savings, she adds.

“It’s great we are moving towards and embracing more of a savings culture, if you will,” McHugh says. “I think it is something that is necessary and very encouraging and we’d like to see it continue.”

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