Though there are many attempts being initiated to help the U.S. people save more for their retirement via the retirement benefits savings, the amount of savings actually went down in the last year. The key factor behind this change was the unpredictable economic atmosphere. Many Americans accept that they are not saving enough for the kind of life they planned to live after retirement.
The Reduced Retirement Benefits Savings
The reduced retirement benefits savings were highlighted in the Fidelity Analysis done in the month of June. The analysis involved about 14.2 million people. It showed that the 401(k) balance fell by 2.5 percent for the three months ending in June when compared to the same timeframe last year. The Individual Retirement Account (IRA) balance has also reduced by 7 percent when compared to the same quarter of the year 2015. The conclusion is based on studying 8.2 million IRA accounts.
These figures were highlighted in today’s atmosphere that has low-interest rates that depress the bond yields and somewhat flat S&P 500 since the last 12 months ending in June. The Swings in the market were also a result of major shocks such as the Brexit referendum and Shanghai Composite in 2015. These shocks also relegated a bunch of investors to the sidelines.
The Dramatic Swings
A Senior Vice President at Fidelity, Doug Fisher has stated that the retirement savers are always adapted to the market volatility but the swings that occurred in the second quarter were very dramatic. These dramatic swings included 600 point drop that was followed by an 800 point increase.
There was not much change in the accounts of Fidelity investors during the 12 month period ending in June. Only 8 percent customers made changes to their accounts in the specified timeframe.
It was also revealed that about 32 percent Americans have accepted that their retirement savings are not enough. They feared that the retirement savings would not be enough to allow them to live a life they always wanted to in retirement.
The Hard Fact
Another hard fact worth mentioning here is that the nation is facing about 1 trillion pension shortfall. This is due to two vital factors, aging population and continually stretched state budgets. People’s inability to save enough towards the retirement benefits in such a scenario is a very bad news.