Americans have pumped 401(k) holdings to record levels — and been rewarded for their patience
Americans maintained high retirement savings rates despite stock market volatility this year.
Fidelity reported a record 14.3% average 401(k) savings rate in Q1 2025.
Staying invested during market downturns is a critical part of successful retirement planning.
Despite stock market jitters, Americans stayed the course with their retirement savings, and their grit through a period of intense volatility has paid off.
While retirement savers saw a drop in average 401(k), 403(b), and IRA balances due to market volatility, they continued to contribute to their retirement accounts at record rates.
The average 401(k) savings rate hit a record 14.3% in the first quarter of 2025, according to Fidelity's latest retirement analysis of 17.3 million IRA accounts as of March 31, 2025. That number combines both employee and employer contributions and marks the highest collective savings rate ever tracked by the asset manager. The employee contribution rate was 9.5%, and the employer contribution rate was 4.8%.
The 14.3% savings rate is the closest it's ever been to Fidelity's recommended savings rate of 15%.
As markets gyrated amid trade war tensions earlier this year, it would be understandable to see many investors pause contributions or even pull money out of the market. Indeed, some retail investors did pull out and increase their allocations to cash.
However, with tariff volatility now in the rear-view, staying invested has proven to be the best move.
Since the end of March, the S&P 500 is up more than 6%, and the benchmark index is up 1.7% year-to-date. Those who stopped investing in response to market volatility would have missed out on the S&P 500's best May in 35 years.
A chart from Fidelity shows outcomes for a starting balance of $100,000 invested in 70% stocks and the rest in bonds and cash between January 2022 and December 2024.
In this scenario, the worst-performing strategy was to move to cash in July 2022, after the market dropped 20%, and stop contributing. The best-performing strategy was to stay the course and maintain the same asset mix, with annual contributions of $10,000. Even if you moved to cash and continued to contribute, the end result would still be worse than if you had remained invested.
Stocks have historically experienced three downturns of 5% a year, one correction of 10% a year, and one 15% decline every three years, so drops in the market are common.
Read the original article on Business Insider
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
35 minutes ago
- Yahoo
Why NuScale Power Stock Soared 93% Last Month
NuScale Power is soaring along with the narrative around nuclear energy stocks. Companies are looking for nuclear power to provide reliable electricity generation. The stock is overvalued for a company that may never generate any revenue. 10 stocks we like better than NuScale Power › Last month, shares of NuScale Power (NYSE: SMR) shot up more than 93%, according to data from S&P Global Market Intelligence. The designer of small modular nuclear reactors (SMRs for short) won approval for one of its designs and is benefiting from the narrative around a nuclear renaissance in the United States. It currently has a market cap of $9 billion, zero revenue, and a share price that is up 347% in the past year. Here's why the stock rocketed higher yet again in the month of May. We are in the midst of a power generating revolution. The insatiable demand for electricity from artificial intelligence (AI) data centers is causing power consumption to grow again in the United States. To prepare to match supply with demand, the large technology companies are signing long-term deals with utilities. For example, just this week, Meta Platforms signed a deal with Constellation Energy for 1.1 gigawatts of power from one of its nuclear reactors. And the president has signed executive orders calling for a reinvigoration of the nuclear power industry. While none of this will directly impact NuScale Power, investors generally view the company in the category of nuclear stocks, which is why its shares are soaring this year. It has nothing to do with its financials, which are basically nonexistent. The company hopes to benefit from this demand when its reactors come on line, which will not be until 2030 at the earliest. NuScale may be a hot stock today, but it is highly risky and has a difficult path ahead of it. It is generating zero revenue, will not generate any for many years, and is burning around $100 million in free cash flow annually. It has a market cap approaching $10 billion even without any sales. SMRs are an interesting idea, but are a cutting-edge technology that may not work at scale. Investors buying shares today are essentially betting on a science project making a company with a market cap of $8.9 billion worth something well into the future. This is not a good bet to make. It could end in pain for shareholders. Avoid NuScale Power stock today. Before you buy stock in NuScale Power, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and NuScale Power wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $869,841!* Now, it's worth noting Stock Advisor's total average return is 789% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Constellation Energy and Meta Platforms. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy. Why NuScale Power Stock Soared 93% Last Month was originally published by The Motley Fool
San Francisco Chronicle
38 minutes ago
- San Francisco Chronicle
Supreme Court allows DOGE team to access Social Security systems with data on millions of Americans
WASHINGTON (AP) — The Supreme Court handed the Trump administration two victories Friday in cases involving the Department of Government Efficiency, including giving it access to Social Security systems containing personal data on millions of Americans. The justices also separately reined in orders seeking transparency at DOGE, the team once led by billionaire Elon Musk. The court's conservative majority sided with the Trump administration in the first Supreme Court appeals involving DOGE. The three liberal justices dissented in both cases. The DOGE victories come amid a messy breakup between the president and the world's richest man that started shortly after Musk's departure from the White House and has included threats to cut government contracts and a call for the president to be impeached. The future of DOGE's work isn't clear without Musk at the helm, but both men have previously said that it will continue its efforts. In one case, the high court halted an order from a judge in Maryland that has restricted the team's access to the Social Security Administration under federal privacy laws. 'We conclude that, under the present circumstances, SSA may proceed to afford members of the SSA DOGE Team access to the agency records in question in order for those members to do their work,' the court said in an unsigned order. Conservative lower-court judges have said there's no evidence at this point of DOGE mishandling personal information. The agency holds sensitive data on nearly everyone in the country, including school records, salary details and medical information. Justice Ketanji Brown Jackson said the court's action creates 'grave privacy risks' for millions of Americans by giving 'unfettered data access to DOGE regardless — despite its failure to show any need or any interest in complying with existing privacy safeguards, and all before we know for sure whether federal law countenances such access.' Justice Sonia Sotomayor joined Jackson's opinion and Justice Elena Kagan said she also would have ruled against the administration. The Trump administration says DOGE needs the access to carry out its mission of targeting waste in the federal government. Musk had been focused on Social Security as an alleged hotbed of fraud. The entrepreneur has described it as a ' Ponzi scheme ' and insisted that reducing waste in the program is an important way to cut government spending. But U.S. District Judge Ellen Hollander in Maryland found that DOGE's efforts at Social Security amounted to a 'fishing expedition' based on 'little more than suspicion' of fraud, and allowing unfettered access puts Americans' private information at risk. Her ruling did allow access to anonymous data for staffers who have undergone training and background checks, or wider access for those who have detailed a specific need. The Trump administration has said DOGE can't work effectively with those restrictions. Solicitor General D. John Sauer also argued that the ruling is an example of federal judges overstepping their authority and trying to micromanage executive branch agencies. The plaintiffs say it's a narrow order that's urgently needed to protect personal information. An appeals court previously refused to immediately to lift the block on DOGE access, though it split along ideological lines. Conservative judges in the minority said there's no evidence that the team has done any 'targeted snooping' or exposed personal information. The lawsuit was originally filed by a group of labor unions and retirees represented by the group Democracy Forward. It's one of more than two dozen lawsuits filed over DOGE's work, which has included deep cuts at federal agencies and large-scale layoffs. The nation's court system has been ground zero for pushback to President Donald Trump's sweeping conservative agenda, with about 200 lawsuits filed challenging policies on everything from immigration to education to mass layoffs of federal workers. In the other DOGE order handed down Friday, the justices extended a pause on orders that would require the team to publicly disclose information about its operations, as part of a lawsuit filed by a government watchdog group. Citizens for Responsibility and Ethics in Washington argues that DOGE, which has been central to Trump's push to remake the government, is a federal agency and must be subject to the Freedom of Information Act. But the Trump administration says DOGE is just a presidential advisory body aimed at government cost-cutting, which would make it exempt from requests for documents under FOIA. The justices did not decide that issue Friday, but the conservative majority held that U.S. District Judge Christopher Cooper ruled too broadly in ordering documents be turned over to CREW.
Miami Herald
44 minutes ago
- Miami Herald
Jobs report shifts Fed interest rate forecasts
Will they or won't they? With the relatively bland U.S. labor numbers for May bumping against randy trade deals and thirsty tariff tiffs, there's leverage for Federal Reserve Board Chair Jerome Powell to re-examine the expected three 25-basis point rate cuts later this year. The Department of Labor reported June 6 that hiring remained stable in May with employers adding 139,000 jobs, gains that were slightly higher than expected but down from April. The unemployment rate stayed the same at 4.2%, as expected by most economists. Leisure and hospitality plus healthcare sectors reported the highest numbers of jobs with the DOGE-ed federal workforce among the lowest. But the manufacturing and retail sectors also shed jobs, which coupled with the federal losses, display an irrefutable shock from the Trump administration's trade wars churning the global economy. Bloomberg/Getty Images President Trump, just days before the jobs report, blasted the central bank chairman as "unbelievable" and a "disaster" on Truth Social for Powell's delay in lowering interest rates, a move Trump maintains is choking economic growth. Trump's latest angry tirade against Powell was sparked after the payroll firm ADP reported private-sector firms added just 37,000 jobs in May, the lowest total in more than two years. An irked Trump demanded 'Too Late' "Powell must now LOWER THE RATE." Related: Bank of America predicts major housing market changes are coming soon Minutes from a meeting of the Federal Reserve Bank leaders, which was held in early May and released on May 29 show the central bank voted to undertake open market operations "as necessary" to maintain the federal funds rate in a target range of 4.2% to 4.50%. In a related action, the Board of Governors of the Federal Reserve System voted unanimously in early May to approve the establishment of the primary credit rate at the existing level of 4.5 percent – which means interest rates for lenders, consumers and the rest of Americans won't be budging in the near term. This added fuel to Trump's increasing vitriolic displays against Powell (a mere harbinger of what the president started throwing down against former First Buddy and Tesla (TSLA) CEO Elon Musk on June 5.) Market participants remain downbeat about interest rate cut chances despite President Trump's demands. The CME's highly-watched FedWatch tool showed a decline in odds of an interest rate cut this summer. Related: Fannie Mae predicts major mortgage rate changes are coming soon The chances the Fed Funds Rate will be in a 4% to 4.25% range in July fell to 16.5% on Friday, June 6, from 30.4% on Thursday, June 5. The odds were nearly 57% one month ago. The Street's Chris Versace reports the market will need to reconsider the three 25-basis point rate cuts it expects per the CME Fed Watch Tool. "With Atlanta Fed President Raphael Bostic signaling ahead of this data that he sees room for just one rate cut, the growing likelihood is more Fed heads will fall into that camp based on the aggregate data published this week." Verace says. " We also have to wonder if Bostic's comment helps lay the groundwork for the Fed's upcoming set of economic projections that it will publish alongside its next policy decision on June 18.'' Thus, the odds of the Fed indicating just one rate cut in the second half of 2025 will increase if next week's May CPI and PPI data support the "May inflation data we've seen thus far and there is no meaningful progress on trade deals,'' Verace says. Related: Veteran fund manager who predicted April rally updates S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
