Retirement savers cash in after shrugging off stock market woes

Sarah Ackerman of Randolph, New Jersey, has been piling money i nto her retirement accounts during the coronavirus recession. And it's paid off.

Since the shutdown began in March, Ackerman has cut her expenses by $300 to $500 per month by working from home and driving less, providing a boost to her savings. She used to drive two hours a day for work. But she's only filled up on gas twice during the pandemic, and she negotiated a lower rate on her auto insurance, saving her about 30%.

Since she was sitting on extra cash in the spring, Ackerman started maxing out her Simple-IRA, a retirement-savings vehicle, which her employer matches. In April, she opened up a separate Roth IRA account and maxed out her contributions, and then opened a brokerage account.

“I felt nervous at first, but it's been a great opportunity to save more for retirement,” Ackerman ,27, says, who recently received a promotion as a marketing manager at Universal Yums, a snack box subscription company.

“I'm trying to keep a level head, but it does feel good to save when you're young. The more time you're in the market is better than trying to time the market.”

Retirement balances rebound despite COVID

Stocks have done an aboutface and are back near record highs following a coronavirus-fueled sell-off in March. But even during the downturn, workers kept piling money into their nest eggs, according to a new study.

While retirement accounts saw sharp swings in the second quarter due to the economic uncertainty surrounding the outbreak, balances saw doubledigit growth from the first three months of the year, according to a quarterly analysis of retirement savings trends from Fidelity Investments.

The gains were driven by renewed optimism about future economic growth after the Federal Reserve and Congress stepped in and provided an unprecedented a mount of financial aid to prop up the economy.

To be sure, the stock market has churned higher even as the U.S. economy has struggled to recover following a wave of layoffs and bankruptcies. And employers continue to lay off workers at a historic pace as further outbreaks have forced some states to pause reopenings. More than 55 million Americans have sought jobless benefits since state shutdowns began in mid-March.

But that hasn't stopped some savers from pushing money into their retirement accounts. Investors boosted their IRA contributions last quarter, including Roth IRAs, resulting in record-breaking flows to retail retirement accounts, according to Fidelity. And contributions to workplace retirement accounts, from both employees and their employers, remained steady.