Stock market gains helped drive up balances in the average U.S. 401(k) retirement-savings account to a record $74,900 as of March 31, according to Fidelity Investments.

The figure is up 12% from a year earlier and is the highest since the giant fund firm began tracking the data in 1998. Fidelity gave the number in its quarterly update on 401(k) accounts released on Wednesday.

Fidelity's figures are closely followed by retirement specialists because the Boston-based firm is the largest administrator of retirement savings plans, covering roughly 11 million workers.
Its data is seen as an indicator of how well retirement savings are rebounding from the financial crisis.

Of the increase over the past year, two-thirds was due to market gains and the rest to contributions by workers, said Fidelity Vice President Beth McHugh.

OLDER WORKERS HAVE MORE ASSETS

Averages were higher for older workers and those who have added steadily to their 401(k)s. Among those active in a plan for 10 straight years, the average balance at March 31 was $191,000, up from $169,200 a year earlier; within that group, those 55 and older had saved $233,800 on average, up from $203,600 a year earlier.

McHugh said about 10% of plan participants increased their 401(k) contributions in the past quarter, while 3.2% cut their contributions.

In the depths of the financial crisis in late 2008, more people were cutting their contributions, a likely sign of households being under pressure from job losses.

Other measures still showed stress, however, notably the percentage of plan participants who have borrowed money from their 401(k) accounts. This stood at 22.1% of participants as of March 31, down just slightly from 22.4% at December 31, the all-time high.
Fund companies like Fidelity, T Rowe Price Group and Legg Mason Inc have benefited from rules designed to encourage private retirement accounts as a supplement to Social Security and other retirement savings.

The 401(k) movement has risen as many firms have abandoned defined-benefit pension plans, leaving workers much more exposed to market volatility, especially in equities, as they craft their retirement strategy.

Individuals have reduced their equity fund holdings in response, in favor of more fixed-income investments, although Fidelity and other companies lately have encouraged workers to keep their asset mix at levels tied to their ages and comfort with risk, and have warned against abandoning equity-based funds.

The slow but steady rise in average 401(k) balances has eased some of the political pressure on the accounts. At the same time, it is not clear what behavioral changes investors might make after the wild ride some of their funds took during and after the financial crisis, said Jack VanDerhei, research director at the Employee Benefit Research Institute, a Washington trade organization.
VanDerhei plans to study whether the recovery of balances will encourage workers to save more in their accounts, and whether savers have grown more cautious in their investment choices.