PROVIDENCE – A volatile stock market hasn’t deterred people from socking away money for retirement, with 401(k) savings rates at record levels despite market-induced declines in account balances, according to a new study by Fidelity Investments Inc.
The 13.9% savings rate, reflecting contributions from both employers and employees, continues the record-setting levels of the prior quarter, according to the Q2 2022 Retirement Analysis. The strong savings trend helped to offset stock market declines, with account balances dipping but by less than the S&P 500, according to the study.
Federal and State Nursing Home Staffing Mandates
Staffing has always been an ongoing challenge in the long-term care industry. However, since the…
Learn More
Indeed, the average 401(k) balance of $103,800 was down 15% from the prior quarter, versus the 16.% drop in the S&P. The average IRA account balance fell 12.8% over the prior quarter to $110,800, while the average 403(b) account of $93,300 marked a 13% quarterly decline.
In addition to record savings rates, Fidelity also saw a rise in the number of IRAs on its platform, with the 12.8 million maring a 10.8% increase year over year.
Meanwhile, outstanding 401(k) loans continue to decline, with the percentage of participants with outstanding loans dropping to 16.7% as of the second quarter of 2022, versus 18.9% two years ago.
Just 5% of 401(k) and 403(b) savers changed their asset allocations in the second quarter.
“Although many Americans are understandably concerned about the economy, record-high inflation and markets at this time, it’s encouraging to see the prevailing emotion has been to stay calm and focused on one’s retirement objectives,” Kevin Barry, president of Workplace Investing at Fidelity Investments, said in a statement. “Saving for retirement is a goal that is decades in the making, and there will naturally be many twists and turns. However, the best action savers can take to help achieve success is to consistently save and invest.”
The study reflects results of 35 million IRA, 401(k) and 403(b) accounts as of June 30.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
