Workers in certain industries tend to have higher 401(k) balances, Fidelity data shows

To gauge your retirement preparedness, you may compare your 401(k) balance with other savers’ progress. But you might find that people in your field are a better comparison point than those in your age group. Recent data from Fidelity finds that 401(k) plan investors on the firm’s platform had a $125,900 average 401(k) balance in the first quarter. When broken down by age, the average balance was $241,200 for baby boomers, $178,500 for Gen X, $59,800 for millennials and $11,300 for Gen Z. Yet comparing balances by industry may help savers better gauge how they compare with their fellow workers. Fidelity put industry data together so the companies on its 401(k) platform could better understand their employees’ savings behavior, according to Mike Shamrell, vice president of thought leadership for workplace investing at Fidelity. “We still have a lot of companies that are really in a war for talent,” said Shamrell, and their 401(k) plans are often a hiring tool. “They want to make sure that what they’re doing is aligned with the companies that they’re competing with for talent,” Shamrell said. The average 401(k) balance tends to be higher in industries where pay is greater, he noted. Legal services is at the top of that list, with a $306,400 average 401(k) balance. The petrochemical industry came in second, with $255,500, followed by energy production/distribution, with $214,400. Industries with the lowest average 401(k) balance include retail trade, with $51,200; health care excluding physicians, with $66,600; and real estate, with $70,700.

What experts say to focus on instead

Instead of balances, a better metric to gauge workers’ retirement savings success is their total savings rate, experts say. Fidelity generally advises workers to aim to set aside 15% of their pre-tax income, including employer contributions, toward retirement. Overall, Fidelity’s 401(k) participants had an average total savings rate of 14.2%, including employee and employer contributions — the closest it has ever been to the firm’s recommended savings rate. While workers may get distracted by how big they think their nest egg needs to be in order to retire — with one recent Northwestern Mutual survey suggesting people believe they need $1.46 million to live comfortably in retirement — experts say it’s generally best to focus on a consistently high savings rate. Industries where the total savings rate is highest include pharmaceuticals, with a total savings rate of 19.7%; petrochemicals, 19.1%; and airlines, 18.4%. Industries with the lowest average total savings rate include retail trade, 10.4%; health care, excluding physicians, with 10.9%; and construction and scientific and technical, each with 12.3%.

Where employer help is most generous

Of course, to have a high total savings rate, it helps to have generous help from employers. The overall average employer contribution rate is 4.8%, according to Fidelity. The industries where employer contribution rates are highest include petrochemicals, with 8.2%; and pharmaceuticals and airlines, each with 7.8%. The industries where employer contribution rates are lowest include health care, excluding physicians, with 2.9%; retail trade, 3%; and scientific and technical, 3.1%. To be sure, any retirement savings progress may be diminished if investors take out a 401(k) loan, as 17.8% of Fidelity’s plan participants have.