Retirement balances for midcareer workers declined between 2019 and 2022, despite gains on financial assets such as stocks during that period, according to new research.
However, the loss isn't necessarily as bad as it may initially seem, financial experts said.
Median combined 401(k) plans and individual retirement account balances for people ages 35 to 44 declined to $50,000 in 2022 from $63,500 in 2019, according to a recent study by the Center for Retirement Research at Boston College, which analyzed triennial data from the Federal Reserve's recently issued Survey of Consumer Finances.
Savers in the analysis span two generations: older millennials and younger members of Generation X.
The CRR report analyzed balances among working households with a 401(k) plan. The balances aren't adjusted for inflation, which touched a 40-year high in 2022 and eroded the buying power of that money.
Meanwhile, retirement balances for older age groups increased during the same period. Savings for 45- to 54-year-olds jumped to $119,000 from $105,800, while those for 55- to 64-year-olds increased to $204,000 from $144,000, the study found.
At first glance, falling balances among younger savers doesn't make sense. U.S. stocks had a nearly 25% return between 2020 and 2022, according to the study, and younger savers tend to be tilted more heavily toward stocks due to their longer investment time horizon.
Investment-grade U.S. bonds lost 6.5% during that period.
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