How Do Retirement Savers Stack Up? Gen Z And Millennials Are Saving At High Rates

Recent downturns in the stock market have some retirement savers questioning the long-held wisdom that slow and steady wins the race. Between the end of March and mid-June 2022, the S&P alone dropped more than 20%, and fears of recession have many worrying that this decline is only the tip of the iceberg.

But that doesn’t mean you should change your retirement strategy, says Fidelity Investments in its most recent Financial Futures Report. The report, which looks at retirement account data from Fidelity customers in Q2 2022, notes that, despite high rates of concern about the economy, savings rates remain relatively high. Moreover, though retirement savings balances have decreased, they have done so at a slower rate than the stock market.

According to the report, the average 401(k) savings rate in Q2 was 13.9%, and was high amongst young workers as well as those closer to retirement. In fact, several signs indicate Gen Z and millennial workers are saving at high rates, including increases in the number of Fidelity IRA accounts for each demographic, with year-on-year increases of 87% and 24%, respectively. Gen Z also saw lower balance losses than other groups: their 401(k) balances decreased by 8% on average, compared to an overall average loss of 15%, perhaps because the bulk of their savings tends to be placed in relatively less risky target date funds.

“In general, younger generations appear to be more interested in their financial wellness compared to previous generations and as a result have been exposed to more financial concepts from social media and workplace retirement accounts,” says Rita Assaf, the vice president of Retirement Products at Fidelity Investments. “It’s encouraging to see that younger generations understand the importance of focusing on their long-term financial goals, even during periods of market volatility.”

Overall, the data showed the average IRA balance down 12.8% compared to last quarter, while the 401(k) is down an average of 15% and 403(b) accounts are down an average of 13%.

These figures might seem stark, but the report points out they’re all below the S&P 500 drop of 16.1% for the quarter.

Kevin Barry, the president of Workplace investing at Fidelity Investments, says of the report, “Although many Americans are understandably concerned about the economy, record-high inflation and markets at this time, it’s encouraging to see the prevailing emotion has been to stay calm and focused on one’s retirement objectives.” He adds, “Saving for retirement is a goal that is decades in the making, and there will naturally be many twists and turns. However, the best action savers can take to help achieve success is to consistently save and invest.”


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