Retirement savings have seemingly decreased by almost 25% in the past year as the United States grapples with inflation.
The average balance of individual retirement accounts saw a slight increase from $101,900 in the third quarter of 2022 to $104,000 in the fourth quarter of the same year. However, the average amount of $104,000 in IRAs marks a sharp decrease compared to the average total in the fourth quarter of 2021 at $135,600 — a decrease of 23%, according to a report by Fidelity released Thursday.
“Given all the stresses in the world today, such as natural disasters and geopolitical events, Americans continue to confront challenging times in our economy,” said Kevin Barry, president of Workplace Investing at Fidelity Investments.
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Similar to IRAs, the average balance of 401(k) retirement accounts decreased over the same period of time. They went from an average of $130,700 in the fourth quarter of 2021 to an average balance in the fourth quarter of 2022 of $103,900. The decrease marks a shrinking of about 20%.
The average account balance for a 403(b), a retirement account plan offered by public schools and select charities, decreased by almost the same percent at 19%. The average 403(b) amount went from $115,100 in 2021 to $92,683 in 2022.
The study also found that 74% of workers worldwide identify the impact of the cost of living and rising inflation as the biggest cause of stress in their lives. However, approximately 95% of workers identified as being financially comfortable in retirement as a long-term goal.
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“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,” said Joanna Rotenberg, president of Personal Investing at Fidelity Investments.
About 1 out of 6 retired U.S. residents are considering getting a job after retiring. The reasons for people reconsidering the workforce include personal reasons at 57%, needing more money at 53%, boredom at 52%, loneliness at 45%, and inflation at 45%, according to a study from Paychex published in early February.