$21,300: How much the average 401(k) balance has fallen in 2020
Average 401(k) balances dropped 19% during the first quarter, according to analysis from financial services firm Fidelity Investments, which handles more than 30 million retirement accounts. The average balance now sits at $91,000, down from a record high of $112,300 in last year’s fourth quarter–a drop of $21,300.
What it means to HR leaders
Declining 401(k) balances–the result of market volatility due to the coronavirus pandemic–are a big stressor for employees. To temper concerns, HR professionals would be wise to step up and provide messaging to employees to keep them updated–and calm–about their fluctuating retirement accounts. The No. 1 thing employers should be telling their employees is to remember the 401(k) is a long-term investment and it’s meant for retirement, Edward Gottfried, group product manager for Betterment for Business, a provider that works with 500 employer clients, recently told HRE.
Companies also should encourage employees to keep putting money into their 401(k)s, despite volatility, in an effort to maintain financial wellbeing. “It’s always important to continue to contribute to your 401(k),” he says. “We think it’s good guidance for employers to tell [workers] that any savings they can do today will have an outsize benefit, and it’s important [employees] exercise their option to contribute to this employer plan.”