The COVID-19 pandemic has caused us to rethink many parts of our daily lives, such as our health, the jobs we live in, our financial future, education, travel and easy shaking. But according to data released Tuesday, many savers are still financially on the road to retirement.
The combination of a stronger market, pandemic-related stimulus opportunities and sustained investment, disciplined in the second quarter, gave Fidelity Investments cause for optimism. The firm, which publishes its analysis of investors and employer pension trends every quarter, found double-digit growth in 401 (k) plans and individual pension accounts.
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The firm also said 11% of employers reduced or eliminated their employer matches in retirement plans, and about a third of them said they would reinstate it within the next year (another half said they would do so as as soon as possible financially). The employer’s average contribution in the second quarter of the year was $ 1,080 – something that got roughly three-quarters of the workers.
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Pension savers have not stopped saving, Fidelity found. Nearly nine in 10,401 (k) account holders (88%) were contributing to their accounts during the second quarter, which included April, May and June. Of these, 9% increased their contribution rates. Almost all (96%) of the 403 (b) account holders maintained or increased their contribution rates during the same months.
The average balance of 401 (k) in the second quarter was $ 104,400, up 14% from the first quarter but 2% lower than the same time last year. The average balance of account 403 (b) was $ 91,100, an increase of 17% from the last quarter and also a 3% increase from a year earlier. The average pension account was $ 111,500, an increase of 13% from the first quarter and just over $ 110,400 average at the same time last year.
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Millennials continued to favor Roth IRA accounts, which are financed in dollars after tax but can be withdrawn tax-free. This generation accounted for 23% more IRA accounts in the second quarter of 2020. Roth IRAs in particular had a 36-year increase (with a 50% increase in contributions).
Read: The Roth Strategy We Want to Build for Early Retirement
Not all retirees can be optimistic. The pandemic has left millions of Americans jobless, some of whom are close to retirement age and did not yet have enough to retire. The CARES Act, passed in March, allowed savers to withdraw more than usual from pension accounts, although financial advisers urge consumers to think carefully before doing so.