Americans on average have seen their 401(k) accounts lose $34,000 in value in 2022, according to new economic research.
After poring through data compiled by financial services firms, E.J. Antoni and Stephen Moore on behalf of the Committee to Unleash Prosperity found that, since the start of this year, 401(k) plans have suffered more than $2 trillion in losses.
According to the data, the average 401(k) had more than $135,000 at the start of 2022. Those assets have since shrunk on average to about $101,000.
Antoni told the Washington Examiner that what he and Moore reported is a conservative estimate:
“We basically looked at data from a bunch of professional financial services firms and estimated basically the amount of money in 401(k)s, and the number of 401(k)s, and the average balance of 401(k)s at the start of the year, and then we followed how much their holdings, which are going to be mostly things like stocks and bonds, how much that has fallen year-to-date.”
To compare the estimate to others, Antoni said that Fidelity Investments, in its second-quarter report, found that just in the first two quarters of the year, the average 401(k) balance had already fallen about 21%.
“Now we came up with a number that was actually not much larger than that because we made our estimate as conservative as possible,” Antoni said, noting that the Fidelity estimate spans six months while his and Moore's spans a nine-month period.
“If both the stock and bond market were to stage a miraculous rebound in the coming months or even in the coming years, then those values would go back up,” Antoni said. “For the person who is already retired, though, or the person who needs to start drawing down their 401(k), let’s say, you are selling those investments and you are selling them today. Which means you’re realizing that loss today.”
Some people intending to retire this year might have to end up working for another year in the hopes that the market returns by then, Antoni said. If the rout in the stock and bond markets is worse than anticipated, some people might end up paring back their retirement schedule even more.
Antoni and Moore also found that inflation has caused Americans' purchasing power to sink dramatically since January of last year.
On Jan. 20, 2021, the consumer price index was registering inflation running below the Federal Reserve’s preferred 2% threshold. Prices began rising in April of last year, and inflation is now running at a red-hot 8.2%, far more than is healthy for the economy.
The researchers said that the average family in the United States has lost nearly $6,000 in purchasing power due to Team Biden's economic policies.
In order to calculate the $6,000 figure, the economists took data from the Bureau of Labor Statistics on nominal wage gains and adjusted for inflation, which is how one determines real gains. They looked at nominal wage data from January of last year through September and adjusted that for how high the consumer price index has increased during that same time span.
Monthly savings have fallen by a whopping 83%, according to the research. Antoni said that they were able to reach that number using publicly available data collected by the Bureau of Economic Analysis.
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