The coronavirus stock market crash has taken a toll on the average 401(k) balance.
According to a new report from Fidelity Investments, the average 401(k) balance fell 19 percent to $91,400 in the first quarter of the year. The average individual retirement account balance sank 14 percent to $98,900. In the fourth quarter of 2019, the average 401(k) balance was $112,300 and the average IRA balance was $115,400.
Fidelity analysts said it was obvious that the dip was caused by the extreme market volatility caused by the coronavirus pandemic.
“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, said in a statement.
Contribution rates remain steady
Although 401(k) account balances dwindled in the first quarter, Fidelity’s first quarter analysis showed that the majority of retirement savers continued to contribute.
Contribution rates held steady at an average of 8.9 percent, and the average contribution from employers remained at 4.7 percent, according to the Boston-based financial firm.
Fidelity noted that there was a minimal increase in the number of retirement savers who changed their asset allocation. Most moved their savings into a more conservative investment option.
Barry said it was “encouraging to see that many investors stayed the course and did not make drastic changes to their asset allocations.”
“We know that investors continue to be concerned about how the economic environment and global pandemic may impact their health and financial futures, and we are already seeing the impact of the market downturn on our clients,” Barry said. “As a result, Fidelity is responding with comprehensive advice, guidance and reassurance that address their pressing questions and concerns during this difficult time.”