Last year’s financial markets were rough to navigate, which, combined with persistent inflation, rattled investors and made many Americans nervous about their retirement savings.
Perhaps said worries were warranted. Alight’s 2023 Universe Benchmarks Report found that the average defined contribution retirement plan balance fell to $111,210 by the end of 2022 from $144,280 at the beginning of the year.
What’s more, the report found the median plan balance was $23,818, the lowest value in over a decade. Meanwhile, the median return for investors during 2022 was a shocking -14.7%.
Yet, Alight also noted a few silver linings — such as the fact that only 3% of plan participants stopped contributing, and that the number of people who increased contribution rates was more than double the number who decreased their savings.
Alight noted that “most participants resisted the temptation to make knee-jerk reactions when it came to their investments.”
“With inflation rates falling and people continuing the return to pre-pandemic life, it will be interesting to see if workers return to saving at higher rates,” the report stated.
So far this year, markets have been faring better. The S&P 500 is up 15% (as of July 10) year-to-date and the NASDAQ is up 30%, according to MarketWatch.
And following that upward trend, total U.S. retirement assets are also up, at $35.4 trillion as of March 31, 2023. This represents a 3.5% increase from Dec. 31, 2022, according to the Investment Company Institute.
Assets in individual retirement accounts (IRAs) totaled $12.5 trillion at the end of the first quarter of 2023, a 4.3% increase from the end of the fourth quarter of 2022. Defined contribution (DC) plan assets were $9.8 trillion at the end of the first quarter, up 5% from Dec. 31, 2022. Meanwhile, government defined benefit (DB) plans — including federal, state, and local government plans — held $7.7 trillion in assets as of the end of March 2023, a 0.5% increase from the end of December 2022.
