We’re contributing more to our IRAs than before the recession … But is it enough?

Woman holding pink piggy bank

We all deserve a pat on the back, but let's make it a small one.

A recent study from Fidelity Investments shows that we're putting more in our Individual Retirement Acounts (IRAs) than we did five years ago, before the financial crisis and recession.

In fact, the analysis of contributions made by investors to Fidelity IRAs shows that average annual contributions rose close to 15% over the last 5 years.

That's not easy to do, considering the turmoil in the economy.

Average contributions hit $3,930 for the 2011 tax year — January 1, 2011, through April 17, 2012.

Compare that to the 2007 tax year — January 1, 2007, through April 15, 2008 — when the average contribution was only $3,420.

Why the bump?

It seems that the dismal economy has scared savers straight.

“The historic market conditions over the last several years have jump-started many investors to take control of their personal economy and increasingly focus on saving for their retirement,” says Ken Hevert, vice president of Fidelity Investments.

And it's not just baby boomers or those on the cusp of their golden years who are increasing their savings.

All age levels have seen percent contribution increases in the double digits.

For example, check out this comparison of contribution trends across all age groups from Fidelity:

IRA Contribution Trends

Age Range Average 2011 Tax Year Contribution Average 2007 Tax Year Contribution Percentage Increase
20-29 $3,210 $2,840 12.9%
30-39 $3,350 $2,970 12.7%
40-49 $3,610 $3,160 14.1%
50-59 $4,480 $3,970 12.8%
60-69 $4,690 $4,140 13.4%
70+ $4,650 $4,030 15.3%

Probably one of the most exciting things is that, as Hevert notes, more investors seem to be leveraging the power of investment accounts with tax advantages.

And those tax incentives can provide a big lift to your nest egg.

So if you have the funds, max out your account.

The annual contribution limit for an IRA in 2012 is $5,000, or $6,000 if you're 50 or older.

Of course, contributing the maximum to your account annually is just the tip of the iceberg when it comes to building your stash.

As we all know, due to record-low interest rates, it's a lot tougher than it used to be to get a high return from safe investments like CDs or money market accounts.

What's the answer?

I think we should be stashing away even more, if possible, regardless of the rise in our contribution amounts.

Remember that it's important to take advantage of your employer's 401(k) plan and set aside as much as possible on a yearly basis.

The 401(k) limit is $17,000 for 2012 or $22,500 if you're 50 or older.

I'm curious — what strategies are you using to give your financial assets a boost?