Retirement Accounts Soar Thanks to the Q1 Market Rally

By: Anneken Tappe · April 04, 2024 · Reading Time: 3 minutes

U.S. stock markets have rallied in recent quarters. Over the past six months, the S&P 500 and Nasdaq Composite are up 22% and 23% respectively. Both notched new record highs in March, with the S&P 500 recording more than 20 records. And for many Americans, this means that the retirement account balances are doing well.

Average retirement account balances are now at their highest point in two years, per Fidelity estimates , with the average 401(k) balance sitting at $118,600 as of Q4 2023. The number of 401(k) millionaires also surged 20% from Q3 to Q4 of last year.

3 Steps To Protecting Your Nest Egg

Retirement saving is a long game, and every contribution counts. And though it can be tempting to look at your nest egg, making withdrawals comes at a price. Here are some things to keep in mind.

1.    Factor in taxes when making withdrawals. The taxes you owe on your withdrawals will vary based on factors like location and income, but overlooking them could leave you with less cash on hand than planned.

2.    Plan for a long life. As people live longer, retirement funds have to last longer, too. Contributing what you can, especially early in your working life can make all the difference. Employer-sponsored plans like 401(k)s aren’t the only way to save for your third act. Also explore IRAs, and other alternatives like life insurance.

3.    Don’t look now. Stocks have posted impressive rallies recently, but bear in mind that the average annual return of the market is about 10%. Investing for the long term means not to get flustered when the market is having a bad streak, or even a bad year.

Read more retirement planning strategies here.

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