401(k) ‘millionaires’ see accounts drop to six-figures

By RetirementFOXBusiness

Adjusting your retirement portfolio for a volatile market environment

Brandywine GLOBAL Portfolio Manager Jack McIntyre on how to adjust investors' retirement portfolios for the volatile market.

The number of 401(k) millionaires fell precipitously in the fourth quarter of 2018, amid increased market volatility after December registered as the worst month for stocks since 1931.

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The amount of individuals with at least $1 million in their 401(k) savings account declined by 28.6 percent to 133,800, according to data from Fidelity Investments. In the third quarter, there were 187,400 401(k) millionaires, a record number.

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For many retirement savers, the recent market volatility is the most significant they have seen in several years,” Kevin Barry, president of workplace investing at Fidelity Investments, said in a statement.

Retirement Accounts Take a Hit 

    • Average 401(k) balance dropped to $95,600  down 10 percent from the third quarter’s record high of $106,500
    • The average annual contribution was $6,850
    • Average IRA balance fell to $98,400
    • The average annual contribution was about $4,200  

Ninety-nine percent of investors, however, contributed to their account during the quarter. Morningstar recently reported that U.S. equity funds were the only major category to see inflows during the month of December, amid the selling, with Vanguard’s Total Stock Market Index raking in $14.1 billion, the most in 10 years.

December was a particularly brutal month for stocks – with all three major averages down about 10 percent.  The declines were precipitated by concerns over a prolonged trade war between the U.S. and China and prospects of slowing global growth.

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Despite the volatility, Fidelity found that only 5.6 percent of 401(k) savers significantly changed their allocations.

However, investors like saw a bump last month, as the major averages saw sharp increases. The Dow Jones Industrial Average and the S&P 500 had their best months since October 2015, and their best January performances in 30 and 32 years, respectively.