Americans may be afraid to look at their retirement accounts due to the volatility of the stock market, but many investors are still staying on the course, according to the latest Fidelity Investment data released on Thursday.
According to Fidelity 2022 participants’ first-quarter data, the savings rate for 401 (k) plans reached a record level of 14%, just one percentage point away from the proposed 15% for Fidelity retirees.
Mike Schmerel, a spokesman for Fidelity Investments, said: “More and more of our retirees are not changing based on short-term market events. “They are deciding to stay on course and take a long-term approach.”
Most savers also did not hesitate to allocate their assets, and those who did were more likely to be older participants near retirement, Schmerel said. Of the 401 (k) account holders who changed in the first quarter of 2022, the majority (82%) made only one change out of 5.6%. Of the 403 (b) account holders, only 4.4% changed their plans in the first quarter, and 87% who made only one change.
“People are beginning to realize that this is something that is about to happen and trying to change based on these short-term events can have a negative effect on your ability to save in the long run,” Shamrel said.
Incentives to save for the workplace, such as automatic enrollment in retirement plans, could be a reason for fewer investors to change asset allocations, Chamelel said. Many participants, especially young workers, have their savings in a target-date fund, which links its asset allocation to a specific year, such as 2055 or 2060.
However, not all savers saw the benefits of their increased savings rates. Retirement account balance decreased from the last quarter or the same period last year. For example, the average balance of 401 (k) in the first quarter of 2022 was $ 121,700, down from $ 130,700 in the previous quarter and from $ 123,900 in the first quarter of 2021; The IRA balance last quarter was $ 127,100, down from $ 135,600 in the last quarter of 2021 and $ 130,000 less than in the first quarter of 2021. The average 403 (b) balance in the first quarter of this year was $ 107,600, down from $ 115,100 in the previous quarter but $ 300 more than the same period last year.
Still, the 1 million balance remains achievable – there were 406,00 401 (k) millionaire account holders in the first quarter of 2022, and 346,800 IRA millionaires, Shamrel said.
Very few workers borrowed from their 401 (k) account. The number of people starting a new loan dropped for the third quarter in a row – only 2% in the first quarter – and the percentage of participants with outstanding debt balances also dropped to 16.6% in the fourth quarter in a row.
Consistency among Fidelity’s retirement plan participants has proven to be important. For those who have contributed to the same 401 (k) plan over the past five years, their average balance increased from $ 115,000 in the first quarter of 2017 to $ 257,400 in 2022. Those who have been on the same plan for the last 10 years have seen their balance increase from $ 85,100 in the first quarter of 2012 to $ 383,100 in 2022. And participants in the same plan for 15 years had an average account balance of $ 64,900 in the first quarter of 2007 and $ 482,900 in 2022.