April 30, 2021

THANKS, LOCKDOWN!:

COVID-19 has prompted a boom in retirement savings (Howard Gold, 4/29/21, Market Watch)

According to Fidelity Investments, the average balance in IRA accounts at the firm rose from $115,400 in the fourth quarter of 2019 to $128,100 in the fourth quarter of 2020, an increase of 11%. With dividends reinvested, the S&P 500 SPX, +0.68% gained nearly 18% during that time, but remember, most IRAs are invested in a mixture of stocks, bonds and cash and few are 100% in equities.

Last year, the number of Fidelity IRA accounts that received a contribution increased by 35% and the average contribution per account rose by 5%. That doesn't sound like much, but it suggests that many people who kept their jobs (about eight million jobs lost last year still haven't returned) decided to step up their retirement savings during the pandemic, along with buying Pelotons PTON, -4.19% and subscribing to Netflix NFLX, +0.49%, HBO Max T, +1.23% and Disney+ DIS, +1.06%.

Furthermore, Fidelity reported, the number of new, traditional, Roth and Roth for Minor IRA accounts increased by 56% from 2019 to 2020. That's in line with data from Charles Schwab SCHW, +2.65%, which reported a 50% increase in IRA openings during the first two months of 2021 over the first two months of 2020, a slightly different time period.

Posted by at April 30, 2021 12:00 AM

  

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