Fidelity Investment’s average 401(k) balance rose to a new high of $84,300 at the end of the third quarter, up 11.1% from a year ago. Employees who were continuously active in their 401(k) plan over the last 10 years saw the average balance rise 19.6%, to $223,100, during the past 12 months, according to Fidelity. For pre-retirees age 55 or older who have been active in their plan for at least 10 years, the average balance is now $269,500.

Fidelity also found that with the increased adoption and availability of target date funds and managed accounts in workplace retirement plans, 1 out of 3 employees now utilize a professionally managed investment option for their 401(k) assets. Just a decade ago, nearly all plan participants were “do-it-yourself” investors, those who made the bulk of their investment decisions completely on their own.

“Today’s 401(k) plan is profoundly different than it was a decade ago,” said James MacDonald, president of Workplace Investing at Fidelity. “Plan design has evolved greatly to reflect the fact that 401(k) plans are often the primary driver of retirement savings for most working Americans. Professionally managed investment options can help working Americans achieve better retirement outcomes by creating a diversified portfolio, which is often the most challenging aspect of participating in a workplace retirement plan.”

While nearly all 401(k) participants were “do-it-yourself” investors a decade ago, the population of participants who are choosing their own investment line up has dropped dramatically with the rise and use of target date funds and managed accounts, Fidelity analysts say. 

At the end of the quarter, one third (33.1%) of 401(k) participants had all of their plan assets in a target date fund, up from just 3% 10 years ago. Among younger Gen Y participants, 55% had all their assets in a target date fund.

Since the third quarter of 2009, Fidelity has seen a more than three-fold increase in the portion of employers offering managed accounts to their employees, as well as the number of participants utilizing the service. In addition, assets in retail managed accounts – such as those in IRAs or individual brokerage accounts – have more than doubled since then.

“A managed account acknowledges that some participants prefer a more personalized approach with their investment strategy based on their specific needs, including their emotional tolerance for risk or assets outside their 401(k),” said MacDonald.

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