Here’s How Much Retirement Savings Have Dropped Since COVID-19

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Are you wondering how the changes in your retirement account balances lately stack up next to other savers’ results?

Fidelity Investments’ latest quarterly analysis of trends in its customers’ retirement accounts can give you an idea. It includes account balances as of March 31 for millions of 401(k) plans, individual retirement accounts (IRAs) and other types of retirement accounts administered by Fidelity.

That means these balances also reflect the initial financial ravages of the coronavirus pandemic — including a precipitous drop from which stock market benchmarks like the S&P 500 and Nasdaq composite have yet to recover fully.

Corporate 401(k)s: Down 19%

Fidelity 401(k) accounts sponsored by corporate employers had an average balance of $91,400 at the end of March. That’s a 19% drop from the all-time high of $112,300 reached in 2019’s fourth quarter.

Ten years ago, at the end of the first quarter in 2010, these accounts had an average balance of $71,500.

IRAs: Down 14%

Fidelity’s $98,900 average IRA balance for the first quarter of this year is down 14% from the prior quarter’s average of $115,400.

Ten years before, the IRAs held an average of $66,200.

403(b) and similar plans: Down 19%

Generally, 403(b) plans are sponsored by public-school and nonprofit employers. Fidelity also groups similar retirement accounts — such as 457(b) plans, which are sponsored by state and local governments — in this category.

At the end of the first quarter of this year, these plans had an average balance of $75,700, representing a loss of 19% from the previous quarter’s average balance of $93,100.

The average balance for these accounts was $50,000 one decade ago.

Other trends

These losses “were less than the overall market decline,” says Kevin Barry, president of Workplace Investing at Fidelity Investments, in the report.

The report offered a handful of other observations from Fidelity’s data:

  • Investors did not make significant changes to their asset allocations despite recent market turbulence. For example, only 7.3% of 401(k) account holders changed their allocations in those accounts in the first quarter of 2020, compared with 5.2% in the last quarter of 2019.
  • Contributions continued. Most savers did not pull back on contributing money to their retirement accounts, and 15% of 401(k) account holders increased their contribution rate in the first quarter of 2020. The average employer contribution was 4.7%, up from 4.6% in the fourth quarter of 2019.
  • Hardship withdrawals increased slightly. Only 1.4% of individuals took a hardship withdrawal from their 401(k)s in the first quarter of 2020, compared with 0.9% one year earlier.

Those hardship distributions from retirement accounts are temporarily less costly, by the law, under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, a federal law enacted on March 27.

The law allows people who were directly impacted by the coronavirus pandemic to withdraw up to $100,000 from their retirement accounts in 2020 penalty-free. (This includes people diagnosed with the coronavirus infection and their spouses and dependents, as well as people who suffered financially due to being quarantined, furloughed or laid off in connection with the pandemic.)

Fidelity Investments predicts more hardship withdrawals could follow the CARES Act.

Market losses are distressing, especially when you are near retirement. But you can thoughtfully manage the timing of your retirement. We explain more in “7 Ways to Retire — Even When the Economy is Heading South.”

The same’s true when claiming Social Security. Learn about getting a personalized report on the best times to claim Social Security benefits from Money Talks News partner Social Security Choices.