Trump Touts 401(k) Balances That Increased 14% Last Quarter
(Bloomberg) -- President Donald Trump is continuing to cite 401(k) balances as a key economic indicator, saying retirement accounts are doing great even during the Covid-19 recession. New data from Fidelity Investments shows he’s mostly right.
Fidelity said Tuesday that the average 401(k) balance increased 14% in the second quarter as individual investors largely stayed the course after the March rout in equities caused a 19% decline in account balances.
“So, 401(k)s are doing fantastically,” Trump said Saturday as he signed a series of stimulus-related orders. “I hope you kept your stocks. I hope you didn’t sell. I hope you had confidence in your president and confidence that the president was going to be reelected.”
The average balance of $104,400 is now just $1,800 less than a year ago.
That’s in contrast to the Great Recession, when many workers moved their nest eggs out of stocks in favor of safer investments, said Eliza Badeau, vice president of Fidelity.
“People who did have that knee-jerk reaction, those are the people who lost out on the long term growth in equity,” she said.
A separate Charles Schwab survey of 1,000 401(k) account holders found that 59% have taken no action on their accounts in response to the coronavirus. Among those that did take action, people were more likely to increase their contributions or stock exposure than decrease them.
Trump administration policies aren’t hurting. Individual retirement account balances increased 13%, helped in part by a delay in the tax filing deadline that gave people more time to contribute for the 2019 tax year.
And while the CARES act allowed for hardship withdrawals, only 3% of investors took advantage, mostly employees of health care and manufacturing companies, Badeau said.
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