Saving for retirement is one of the most important financial to-dos, but the journey from a zero balance to a comfortable savings you can live off of in your later years isn’t always linear. According to the latest data from Fidelity, the average 401(k) balance dropped for the third consecutive quarter, and is now down almost 23% from a year ago to $97,200. Some of the major culprits? A rising inflation rate and massive stock market swings.
“Many 401(k) account balances are decreasing because the largest asset classes (stocks and bonds) are down double digits this year,” says Herman (Tommy) Thompson, Jr., certified financial planner with Innovative Financial Group. “In addition, economic hardships including rising inflation and job cuts have forced some participants to take loans and distributions at the worst possible time—when the markets are down.”
