The market downturn caused average 401(k), IRA and 403(b) balances to fall in the first quarter, but contributions to retirement accounts held steady, with some investors actually increasing their savings, according to the latest analysis of retirement savings trends released Friday by Fidelity Investments.
The average 401(k) balance was $91,400, down 19% from the record high of $112,300 in the fourth quarter, but still well above the $71,500 balance in the 2010 first quarter.
The average IRA balance decreased by 14% to $98,900, but was ahead of the $66,200 balance 10 years ago. And the average 403(b)/tax exempt account balance fell 19% to $75,700, compared with the average balance of $50,000 a decade ago.
Despite huge market swings in the first quarter, the majority of retirement savers continued to add to their nest eggs. The average 401(k) contribution rate remained steady at 8.9%, consistent with the previous quarter.
Not only that, 15% of 401(k) savers increased their contribution rate in the first quarter. Fidelity noted that these included participants who use their plan’s automatic increase service and had their contribution rate automatically increased in the quarter.
The average employer contribution also held steady at 4.7%, up from 4.6% in the previous quarter and consistent with 4.7% in the 2019 first quarter.
The average amount investors contributed to an IRA increased by 10% year over year to $3,330, up 10% over the average contribution amount in last year’s fourth quarter. Contributions to 403(b)/tax-exempt accounts also increased, to 6.9% from 5.6% in the fourth quarter and 5.4% a year ago.
“Given the unprecedented market volatility this quarter, it’s not surprising that account balances were impacted, although declines were less than the overall market decline,” Kevin Barry, president of workplace investing at Fidelity Investments, said in a statement.
“It was encouraging to see that many investors stayed the course and did not make drastic changes to their asset allocations, with some investors increasing contributions to their retirement accounts.”
Surging New Accounts, Minimal Withdrawals
Fidelity’s analysis showed some 407,000 savers opened IRAs in the first quarter, a 36% increase over new IRAs opened in the 2019 first quarter.