The world came to a standstill during the Covid period but one of the strangest and most positive outcomes of the pandemic was that the U.S. population became increasingly aware of, and interested in, the notion of investing.
According to statistics, the amount of money people saved from their paychecks increased to historic levels during the 2020 and 2021calendar years. More importantly, credit card debt fell significantly during the initial 18 months of the pandemic.
Given that American citizens were on a stronger financial footing, they were thus able to save more for their retirement. Statistics show that each fiscal quarter, Americans have been saving more for their retirement than ever before.
At the end of the 2021 year, the average amount in a 401(k) account, the most common type of retirement plan sponsored by employers, reached the record number of $130,700. This was an increase of 8% when compared to the previous year.
This is what the largest administrator of U.S. 401(k)s accounts had to say about investments and savings during the pandemic: Investors have seen a lot of challenges during the pandemic, but it is surprising to see that the retirement savings of an average American grew significantly over the same period of time. What was even more refreshing to see was that during this period, a lot of Gen Z investors also started putting their money to good use and making smart financial decisions.
The number of retirement accounts at Fidelity grew to a historically high 12.3 million, with a significant number of these accounts being opened up by Gen Zers. The number of IRAs in the Gen Z demographic rose by a whopping 146% in 2021 as compared to the year before.
The number of people investing in their retirement accounts also grew rapidly. Almost three in every eight people increased their 401(k) savings during the 2021 year while almost five in every six people with a 401(k) benefited from their company’s retirement policies to match their 401(k)s.
Various financial advisors and experts at Fidelity have expressed that the average American is becoming more interested and proactive towards reaching their financial goals and retirement savings. This increasing personal financial literacy is one of the positive aspects of the pandemic.
When investing for your retirement, one must remember that little dips in the market will mean nothing in the long run. Remember to keep the following mantra in mind when investing for the long term:
Invest early on. When it comes to investing, time is your fiercest ally.
Take full advantage of your company’s retirement and savings policy. According to experts, you can get your free 401(k) money when you utilize your employer-sponsored retirement policy.
