401(k) Balances Were down 23% in 2022, but Are Now Rebounding

Although the average retirement account balance rose in the fourth quarter of last year, balances ended the year down from a year earlier – losing nearly one-quarter of their value, according to a new Fidelity report.

Although the average 401(k) balance rose in the fourth quarter of last year, balances ended 2022 down 23 percent from 2021, says a new report from Fidelity Investments. In Q4/2021, the average 401(k) retirement account balance was $130,700, and in Q4/2022, it was $103,900, after rebounding from $97,200 in Q3/2022, according to Fidelity.

However, despite record inflation last year and a possible recession on the horizon, U.S. investors remain committed to their retirement objectives, according to Fidelity. Given all the stresses in the world today, such as natural disasters and geopolitical events, Americans continue to confront challenging times in our economy,” said Kevin Barry, president of workplace investing at Fidelity Investments.

“Fortunately, the data shows that retirement savers understand the importance of saving for the long term, despite market shifts,” he said. “We are encouraged to see people look past the current volatility and continue to make smart choices for their future.”

Fidelity’s analysis of savings behavior for the fourth quarter of 2022 found that account balances are up. Among the other findings:

“Year over year, the trends are consistent—if you start saving earlier and avoid reacting to market volatility, you will be better off in the long run,” said Joanna Rotenberg, president of personal investing. “This analysis shows that younger generations are sticking to their plans and working on building good savings habits, from budgeting daily expenses and automatically increasing contributions to taking advantage of an employer match. This is especially important during periods of inflation, when the money you’re accumulating needs to go further.”



From: BenefitsPRO