Average retirement account balances dropped nearly 25 percent last year, according to a new report by Fidelity.
Although retirement balances increased in the fourth quarter of 2022, the average balance of individual retirement accounts (IRA) dropped by 23 percent from the fourth quarter of 2021, according to Fidelity’s research, which was released on Thursday.
The study found that the average IRA held around $104,000 in the last quarter of 2022 — a steep decrease from the prior year, where the average was $135,600.
The average balance of 401(k) retirement accounts also dropped during this time period: a decrease of about 20 percent from fourth quarter of 2021. The average 401(k) account balance in the fourth quarter of 2022 was $103,900 compared to an average of $130,700 in the 2021 fourth quarter.
That average did increase by 7 percent from the third quarter to the fourth quarter of 2022, however, according to the report. The total 401(k) saving rate remained “steady” at 13.7 percent, which is just slightly below Fidelity’s recommended rate of 15 percent.
The average account balance for a 403(b), which is a retirement account plan offered by public schools and some charities, also dropped by about 19 percent.
“Given all the stresses in the world today, such as natural disasters and geo-political events, Americans continue to confront challenging times in our economy,” Kevin Barry, president of Workplace Investing at Fidelity Investments, said in a statement.
The new report also showed that contribution rates slightly increased since 2021, with more than one-third increasing their contribution rates. Fidelity also noted that among Generation Z investors, account balances increased by 14 percent over the last year.
“Fortunately, the data shows that retirement savers understand the importance of saving for the long-term, despite market shift,” Barry wrote. “We are encouraged to see people look past the current volatility and continue to make smart choices for their future.”
