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Published: Jun 16, 2023 5 min read
Tower of blocks analogy with money
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Amid soaring inflation and tumbling markets, the typical retirement account balance took a beating last year.

According to an analysis by the investment management firm Vanguard, 401(k) balances fell more than 20% last year as the stock market struggled through its worst year since the Great Recession.

But it wasn’t all bad news, the firm said, as savers stayed the course and continued socking away a record-high share of their salaries. Financial experts say market downturns can be great buying opportunities over the long run, and those workers who made regular contributions during this time when stocks were cheap could see large gains in the future. The recent return of a bull market, in fact, is already benefitting investors who bought stocks last year.

“Despite significant market uncertainty, nearly a quarter of participants saved at least 10% of their income for retirement” last year, the firm announced Thursday, “and the average deferral rate remained at a historic high of 7.4%.”

John James, managing director of Vanguard’s institutional investor group, recommends that workers should ideally be saving between at least 12% to 15% of their pay for retirement.