SAVING STAYING STEADY

Most 401(k)s intact

The global pandemic has turned into one scary rollercoaster ride, but months into the crisis, the argument for investors to keep calm and carry on is sticking.

Even for those who can remember Black Monday of 1987, the dot-com bubble or the 2008-09 financial crisis, stock-market volatility brought on by rolling pandemic headlines has been one for the history books, and it may not be over by a mile.

Americans saving for retirement can be forgiven for wincing at the quarter ending March 31, which left the S&P 500 with a 20 percent loss, the worst performance since the financial crisis. But the June quarter looks better, with the index up 21 percent as that period winds down.

Of course, that’s small comfort to the 20 million Americans out of work as of May who will struggle to keep contributing to individual plans until and if they can get reemployed.

For those managing to hang onto a job right now, there are threads of hope as financial services giant Fidelity points out that employers look largely dedicated to those vital 401(k) matches. A survey of 302 attendees representing companies whose plans are managed by Fidelity found that 82 percent aren’t considering any match reduction or suspension to plans. Fidelity manages 29 percent of the nation’s 401(k) or 403(b) plans.

And while 9.6 percent of companies report having cut or suspended the match, just over half of those say they have “active plans” to reinstate that in the future.

On the other side, investors have been staying mostly calm since the pandemic began, with very few making drastic moves such as cashing out of their retirement funds, Meghan Murphy, a vice president at Fidelity, told MarketWatch in a late-May interview. In the first quarter, retirement savers opened more new accounts than ever before — at least 407,000 IRAs were created in the first quarter, Fidelity found.

Still, the market volatility has hit one popular yardstick for some investors — Fidelity said the number of investors with $1 million or more in their 401(k) retirement accounts dropped from 180,000 in the first quarter of 2019 to 150,000 in the first three months of 2020.

There were also far fewer than in the fourth quarter of 2019 — 233,000, which is understandable, given heavy losses in the first quarter of the year and market volatility. The June quarter could show many scrambled back up that hill, with data on that available in July, Fidelity said.