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Retirement Savers Withstand 2022 Rollercoaster as Balances Rebound

Practice Management

There’s good news and bad news in Fidelity Investments’ year-end 2022 analysis of savings behaviors and account balances. 

First the bad news. Fidelity’s analysis shows that average account balances for 401(k)s, 403(b)s and IRAs all dropped by more than 20% from year-end 2021 to year-end 2022. The good news is that the average account balances for these plans all increased at year end. 

What’s more, retirement savers continued to focus on the long-term, despite concerns about inflation and economic uncertainty. Total 401(k) savings rates remained steady and the percentage of employees with 401(k) loans at the end of 2022 remained low for a seventh consecutive quarter, the firm notes in its Q4 2022 analysis

“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,” observes Kevin Barry, president of Workplace Investing at Fidelity Investments. “Fortunately, the data shows that retirement savers understand the importance of saving for the long-term, despite market shift. We are encouraged to see people look past the current volatility and continue to make smart choices for their future.”

The findings are consistent with a recent analysis by Vanguard showing that, while average account balances decreased by 20% in 2022, participant behavior in retirement plans remained mostly positive, as most continued to maintain a long-term view on their retirement savings goals.  

Bouncing Back

Indeed, average retirement account balances have increased from the third quarter of 2022. The average 401(k) balance increased to $103,900 in the fourth quarter, up 7% from Q3 2022 and 34% from 10 years ago. The average 403(b) account balance increased to $92,683, up 6% from the third quarter and a 56% increase from 10 years ago. The average IRA balance was $104,000 in Q4 2022, a 2% increase from last quarter and 36% increase from 10 years ago.

Average Retirement Account Balances

Account Q4 2022 Q3 2022 Q4 2021 Q4 2012
IRA $104,000 $101,900 $135,600 $76,700
401(k) $103,900 $97,200 $130,700 $77,600
403(b) $92,683 $87,400 $115,100 $59,600


Savings Rates

Total savings rate for the fourth quarter — which reflects a combination of employer and employee 401(k) contributions — held steady at 13.7%, compared to 13.8% in Q3 2022 and 13.9% in Q2 2022. Fidelity notes that this is just below its suggested savings rate of 15%. 

While pre-retiree Boomers continue to save at the highest levels (16.5%), Gen Z saving levels remain consistent at 10.2% (versus 10.3% last quarter).

For 401(k)s, men continued to save at higher rates than women at 14.4% versus 13.5%, but the total 403(b) savings rate for women (11.7%) actually exceeds the total savings rate for men (11.5%).

Contribution rates also slightly increased, with more than a third of participants increasing their contribution rate over the last year. Among the 401(k) savers that increased their contribution rate, the average increase was 2.6%.

Gen Z Making Strides

Meanwhile, Gen Z 401(k) savers are continuing to increase their balances. Although their balances are relatively smaller, among Gen Z savers, who are heavily invested in target date funds (TDFs), the average account balance increased by 23% over last quarter — the highest of any group. 

Gen Z account balances are also up 14% from Q4 2021, which makes them the only group that had positive growth over the last year, Fidelity notes.  

As of Q4 2022, 84% of Gen Z savers have all their 401(k) savings in a TDF. In the not-for-profit market, almost 70% of participants have invested 100% of their assets in TDFs. 

Notably, Roth IRAs tend to be the retail retirement savings vehicle of choice across generations, with more than 61% of all contributions going into a Roth in Q4 2022.

Loans Decline

Outstanding 401(k) loans and average loan amounts continue to trend downward, with 401(k) loans matching the lowest percentage on record, Fidelity’s data further shows. 

The percentage of participants with a loan outstanding remained at 16.7% for Q4 2022 — down from 17% a year ago and 21% five years ago. Only 3.2% of Gen Z workers had an outstanding loan at year-end.

“Year over year, the trends are consistent — if you start saving earlier and avoid reacting to market volatility, you will be better off in the long run,” emphasizes Joanna Rotenberg, president of Personal Investing. “This analysis shows that younger generations are sticking to their plans and working on building good savings habits — from budgeting daily expenses and automatically increasing contributions to taking advantage of an employer match. This is especially important during periods of inflation when the money you’re accumulating needs to go further.”