With the second-quarter stock and bond markets continuing to imitate a sky diver in free fall, average balances in retirement savings accounts overseen by Fidelity Investments fell for the second straight quarter.
Similarly, the number of 401(k) millionaires and IRA millionaires — accounts with balances of $1 million or more — at Fidelity also plunged.
The average balance in 401(k) accounts overseen by Fidelity fell to $103,800.
That was down from $121,700 at the end of the first quarter. And it was down from the record high of $130,700 at the end of the fourth quarter of 2021 by Fidelity 401(k) accounts.
Fidelity Retirement Savers
The average balance of IRAs held with Fidelity also fell. Their value slid to $110,800. That was down from $127,100 at the end of the first quarter.
It was also down from the peak of $135,700 at the end of the third quarter of 2021.
401(k) And IRA Millionaires
As for retirement account millionaires, the number of 401(k) accounts with balances of at least seven figures plunged to 294,000 by June 30. That was down from 406,000 at the end of the first quarter.
The peak number of 401(k) millionaires at Fidelity was 442,000 as of the fourth quarter of 2021. There were 412,000 at the end of the second quarter of 2021.
IRA millionaires fell to 284,900 as of June 30. That was down from 346,800 at the end of the first quarter of 2022.
IRA millionaires hit a high point of 376,100 at the end of the fourth quarter of 2021. There were 341,600 at the end of the second quarter of 2021.
Silver Linings
Still, silver linings peeked through the dismal numbers.
First, the declines in average balances were smaller than the declines by the broad stock market. The average IRA held with Fidelity fell 12.8% in value. The average Fidelity 401(k) tumbled 15%. The S&P 500 fell harder, slipping 16.1%, per Lipper data.
Retirement account balances reflect ongoing contributions as well as market action.
The second silver lining was the continued growth in the number of IRAs. Fidelity was overseeing 12.8 million IRAs as of June 30. That was a 2.4% climb vs. 12.5 million IRAs at the end of the first quarter. It was a 10.6% increase over the number at the end of the second quarter in 2021.
The ranks of IRA owners grew especially fast among younger workers. The number of accounts held by Gen Z (born 1997 — 2012) skyrocketed 87% compared to the second quarter a year earlier. The number of millennial accounts jumped 24%. Millennials were born 1981 through 1996.
Fidelity Savers Kept Up Contribution Rates
Third, 401(k) savers continued to sock away savings at a high rate. Combined with employer contributions, plan members saved 13.9% of their pay. That was neck and neck with the 14% contribution rate at the end of the first quarter.
Fourth, few 401(k) plan members tried to time the market. Market timing with mutual funds is considered a surefire strategy for lagging the market. Only 5% of 401(k) and 403(b) savers changed their asset allocations in the second quarter. 403(b) plans are, basically, 401(k) plans for employees of public schools and certain charities.
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