Even investors who are aware of how volatile the stock market is did not feel comfortable about the declines in equities experienced in 2022.
The average employer retirement plan balance decreased from $144,280 at the beginning of that year to $111,210 by the end of the year as the Standard & Poor’s 500 Index decreased by over 20%.
Insights On Retirement Plan Losses
The amount of money that retirement savers lost as a result of these defined contribution plans is broken down below.
You may preserve your retirement savings by developing a financial plan with the assistance of a financial counselor.
Data from approximately three million eligible participants dispersed across 100 retirement plans were examined in Alight’s 2023 Universe Benchmarks Report.
The average plan balance decreased to $23, 818, the lowest level in ten years. In 2022, the median yearly return was -14.7%.
The study’s other conclusions were also unfavorable.
The average contribution rate fell from 8.6% to 8.3%, and the average participation percentage in workplace savings programs decreased slightly from 84% in 2021 to 83% in 2022.
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Assessing Employee Retirement Plan Choices
When former employees are taken into account, the percentage who continued to contribute to the company retirement plan fell from 61% in 2021 to 55% in 2022.
Such withdrawals could signify that employees transferred funds from one employer’s retirement plan to another, or into an IRA.
They could also mean that employees cashed out their accounts to retain money in the bank or use it to pay bills.
The broad S&P 500 index was up more than 14% at the end of June, which is more positive so far for 2023.
The Investment Company Institute revealed that plan assets were $9.8 trillion at the end of the first quarter, up 5% from the end of 2022, and that balances for defined contribution plans, such as 401(k)s, are up for the year.
Read More:Steps To Preserve Social Security Retirement Benefits