Retirement savings up in a down market, says Fidelity

Retirement savings up in a down market, says Fidelity
More people were saving for retirement in Q1, data show. Unfortunately, the market's sell-off caused them to lose money.
MAY 19, 2022

The good news is that more people saved for retirement in the first quarter of 2022. The bad news is that they lost money.

According to Fidelity’s first-quarter analysis of savings behaviors and account balances released today, the total 401(k) savings rate reached record levels in the first three months of the year and the number of IRAs on Fidelity's platform also rose.

On the flip side, the asset manager saw the average account balance decreasing as a result of the stock market's negative performance in the first three months of the year. For the first quarter, the Dow and S&P 500 closed down 4.6% and 4.9%, respectively, while the Nasdaq lost 9%.

The total savings rate, which reflects a combination of employee and employer 401(k) contributions, reached a record 14% in the first quarter, which is just below Fidelity's suggested savings rate of 15%.

The average IRA balance was $127,100 in Q1, down 2% from the year-ago period and a 6% decrease from the last quarter, according to Fidelity.

The average 401(k) balance dropped to $121,700 in the quarter, down 2% from a year ago and down 7% from the fourth quarter.

“While the market's performance does impact account balances in the near term, consistent contributions and having an appropriate asset allocation are just as important for a successful long-term retirement savings strategy,” Kevin Barry, president of workplace investing at Fidelity Investments, said in a statement. “Encouragingly, Fidelity's analysis found that the majority of retirement savers continued to demonstrate positive savings behavior, which will help keep them on track to reach their goals.”

Despite the volatility in the markets, just 5.6% of plan participants changed their allocations in their 401(k)s in the first quarter, up slightly from the 5.3% who did so in the fourth quarter, but below the 6.4% of participants who changed their allocations in the first quarter of last year.

Fidelity’s findings also showed the percentage of 401(k) savers initiating a new loan continued to trend downward for the third consecutive quarter, with only 2% of participants initiating a loan in Q1. The percentage of participants with a loan outstanding also continued to decline, dropping for the fourth consecutive quarter to 16.6%.

Finally, when it comes to long-term savers, Fidelity found that the 4.3 million individuals who have been in their company's 401(k) plan continuously for five years saw their average balance grow to $257,400 in Q1, up from $115,000 in Q1 2017.  For the 1.7 million individuals who have been saving in their 401(k) for 10 years, the balance has grown to $383,100, up from $85,100 in Q1 2012.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.