The Average 401(k) Lost 23% Last Year, According to a New Study
February 24, 2023
Retirement savers faced strong economic headwinds in 2022, with the average 401(k) account losing nearly a quarter of its value last year, according to a new study from Fidelity.
The average 401(k) balance did climb in the fourth quarter of 2022, but balances still fell 23% over the course of the year, with the average account sitting at $103,900 at the year’s end.
The report, which is based on an analysis of more than 35 million retirement accounts, also found that the average individual retirement account (IRA) balance fell 20% year river year, falling to $104,000 in the fourth quarter.
Despite surging inflation and higher interest rates, the majority of retirement savers continue to contribute, Fidelity found. The average 401(k) contribution rate, including employer and employee contributions, held roughly steady at 13.7%, and even with household finances being stretched, Fidelity found that just 16.7% of 401(k) plan participants had an outstanding loan from their accounts at the end of the year.
Still, a separate report from Bankrate found that roughly one-third of Americans said they have less in savings now than they did a year earlier, which makes saving for retirement difficult.
The recent downturn is even more worrying for people already in retirement. Nearly half, 48%, of retired Americans believe that they are likely to outlive their savings, according to a report from Clever Real Estate.