Fidelity: Retirement account balances drop for third straight quarter, but savers undeterred

PROVIDENCE – The stock market might be taking investors on a rollercoaster ride, but retirement savers aren’t getting sucked in.

Retirement savings rates held steady in the third quarter, with an increase in the number of account holders through Fidelity Investment Inc.’s platform, according to Fidelity’s Q3 Retirement Analysis.

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The latest drops in account balances mark the third consecutive quarter of declines, driven by stock market volatility, according to the study. Investment retirement accounts took the biggest hit, with average balances down 24.9% year over year to $101,900. Average 401(k) balances fell 22.9% to $97,200, while the average 403(b) account of $87,400 marked a 21% drop compared with a year ago.

Despite this, savings rates held strong, with contributions from employers and employees into 401(k) accounts holding steady at 13.8%. The majority of workers, 86%, kept saving at the same rate, while 7.8% upped their contribution rate. Similarly, most kept the same asset allocation, with just 4.5% of 401(k) and 403(b) account holders making changes.

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Meanwhile, outstanding 401(k) loans and average loan balances declined, with just 16.7% of savers still owing money on a loan, while 2.4% took out new loans in the third quarter, according to the study.

Other findings included:

  • Generation Z 401(k) savers increased their quarterly balances 1.2% over the prior quarter, with most heavily invested into target date funds.
  • Investment retirement accounts increased 11.2% year over year to 13.2 million, with younger generations driving the increase.
  • Men are saving at a slightly higher rate than women (14.5% compared with 13.5%, respectively), while pre-retiree baby boomers are saving at the highest rate among age groups at 16.5%.
  • Nearly 9 in 10 401(k) savers receive some type of employer contribution to their account such as profit sharing or matching contributions.
  • The study reflects analysis of 24,500 corporate defined contribution plans with 22.1 million participants and 13.2 million investment retirement accounts as of Sept. 30.

Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.