401(k) savings went up in 2020, but so did retirement worries

Retirement account balances hit a high point at the end of 2020, rising by about 10% over the year, but many people remain worried about how Covid-19 will affect their savings.

The average size of an individual retirement account at Fidelity Investments at year-end was $128,100, up from $115,400 at the end of 2019, fueled both by contributions and a buoyant market in the fourth quarter, the company reported Thursday.

Meanwhile, the average 401(k) held $121,500 as of Dec. 31, compared with $112,300 a year earlier. Over that period, the average 403(b) plan balance also increased significantly, going from $93,100 to $106,100.

Workers also notched up their savings rates, with those in 401(k) plans averaging 13.5% of pay, including employer contributions, and those with 403(b)s averaging 11%, Fidelity reported. Money going into IRAs also increased, with average contributions up by 5% year over year, and the number of accounts receiving contributions up by 35%.


Despite the new figures showing higher savings rates and account balances, just over half of people said they are worried about how the pandemic will affect their financial security in retirement, according to a report this week from the National Institute for Retirement Security. Three-quarters of the 1,200 people surveyed in December by Greenwald Research for NIRS said that there is a retirement crisis in the U.S.

About 18% of people are changing their plans to retire because of the pandemic, and another 15% are considering doing so, that survey found. The economic fallout from Covid has prompted some people to retire earlier, often because of job loss, and has led others to continue working longer, for a variety of reasons. Among those whose plans have changed, 67% said they will retire later than planned, 26% will do so earlier and 7% will not retire at all.

About a third of people have had their employment or their partner’s affected, with 5% being laid off, 7% being furloughed, 11% seeing a decrease in pay and 14% having their hours cut back, according to NIRS.

Further, about a quarter of people said that their employers have reduced 401(k) matching contributions because of the pandemic.


Nearly half, 45%, of plan sponsors that cut back on plan contributions last year had reinstated them as of January, a separate report this week from T. Rowe Price shows.

Plan sponsors are also taking steps to allow their participants to put money back into accounts that had been depleted via CARES Act distributions and loans, that report found.

About 9% of savers used at least one CARES Act provision to access money in their accounts, though nearly a quarter said they planned to repay their accounts, according to T. Rowe. Fifty-five percent of plans that allowed those distributions and loans said they are now allowing participants to repay themselves.

In Fidelity’s book of business, 1.6 million people took CARES Act distributions, representing more than 6% of its participants. The average withdrawal was $9,400, while the median was $2,500, according to Fidelity.

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