According to a new Fidelity analysis, average retirement account balances fell roughly 25% last year.
Despite an increase in retirement balances in the fourth quarter of 2022, the average balance of individual retirement accounts (IRA) fell by 23 percent from the fourth quarter of 2021, according to Fidelity’s data, which was revealed on Thursday.
Retirement Savings
The average balance of 401(k) retirement savings fell throughout this time period as well: According to Fidelity’s data, which was revealed on Thursday, average retirement account balances fell in the fourth quarter of 2022 compared to the same period in 2021 but increased from the previous quarter.
401(k) account balances averaged $103,900 in Q4 2022, down from $130,700 in Q4 2021 but up from $97,200 in Q3 2022. According to the data, average IRA balances were at $135,600 in Q4 2021, then dipped to $101,900 in Q3 2022, before rebounding to $104,000 in Q4 2022.
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How Investors May Benefit From This?
According to Fidelity’s data, investors can benefit from taking a long-term approach to retirement savings, as IRA balances are up 36% from a decade ago, and 401(k) balances are up 34%.
According to the research, total 401(k) savings rates remained relatively stable in Q4 2022, at 13.7%, compared to 13.8% in Q3 2022 and 13.9% in Q2 2022. This percentage is slightly lower than Fidelity’s recommended savings rate of 15%.
There was a generational gap in savings rates, with pre-retiree Boomers saving the most, at an average of 16.5%, while Gen Z saved the least, at 10.2% – only one-tenth of a percent less than the previous quarter.
According to Fidelity’s data, Millennials and Generation Z are opening more IRA accounts. Millennial IRA accounts surged by 22% year on year, while Gen Z IRA accounts increased by 71% year on year.
Many older Americans are concerned about their future security as their savings gap widens. About half of elderly Americans, or 48%, believe they will outlive their savings.
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