Americans’ average retirement account balances have reached six figures, with Fidelity Investments’ Q2 2023 retirement analysis showing average balances of $113,800 in IRAs, $112,400 in 401(k)s, and $102,400 in 403(b)s. This marks an increase for the third quarter in a row, indicating that Americans have found ways to continue contributing to their nest eggs despite the challenges of today’s economic climate. However, with high prices and many Americans living paycheck to paycheck, saving for retirement may still be a struggle for some. In light of these findings, CNBC Select provides tips for funding retirement in uncertain times.
To start, individuals should prioritize their retirement savings by automating contributions. Setting up an autopay that automatically deducts a portion of each paycheck to a retirement fund prevents spending and helps individuals maintain a lifestyle that accounts for retirement plans. Additionally, individuals with employer-sponsored 401(k) plans should aim to meet their employer’s match. By contributing enough to receive the full match, individuals can easily double their savings and move closer to the recommended guideline of saving at least 15% of their gross income annually for retirement.
For those without access to a 401(k) or with additional savings capacity, opening a traditional or Roth IRA is a viable option. Roth IRAs are particularly popular, as they allow for tax-free withdrawals during retirement. Starting small is also encouraged, as even minimal contributions can benefit from compound interest over time. It is recommended to leave retirement savings untouched and avoid constantly monitoring market fluctuations, as long-term investments tend to yield higher returns. For those interested in more active participation in the markets, robo-advisors such as Betterment and Wealthfront offer low-cost options and personalized investment strategies.
Understanding where Americans’ average retirement account balances stand can serve as motivation for individuals who feel behind in their savings. Following these guidelines can help individuals fund their future comfortably and navigate the uncertainties of the current economic climate.