Retiring comfortably requires careful planning and saving. Relying solely on Social Security benefits is not advisable, as they only replace about 40% of pre-retirement earnings. Most seniors need more than this to maintain a comfortable lifestyle, making personal savings essential. Recent data from Fidelity reveals an increase in IRA balances compared to the previous year.
According to Fidelity’s report, the average IRA balance in the third quarter of 2023 was $109,600. Although this represents a 4% decline from the second quarter, it marks an 8% increase from the previous year. The decrease in IRA balances during the third quarter can be attributed to the volatile stock market in September. However, it is possible that IRA balances have since recovered, although more recent data is needed to confirm this.
If your IRA balance is not growing as desired, it is important to take action. A decline in balance from one quarter to another is not necessarily alarming if it aligns with overall market conditions. However, if your IRA balance remains stagnant over time, there are steps you can take to address the issue.
Firstly, evaluate your savings rate. Increasing your savings rate, such as by saving any annual raise you receive, can significantly boost your retirement savings. If you haven’t received a raise in years, it may be worth considering a job search to improve your financial situation.
Next, review your IRA investment strategy. If retirement is still several years away, it is wise to have a diversified portfolio that includes stocks or broad market index funds. Being too conservative in your investment approach can hinder growth and impede your retirement goals.
Additionally, assess the performance of individual stocks in your IRA. Consider replacing consistently underperforming stocks with those that have better potential, as this can positively impact your overall IRA growth.
While it is encouraging to see an increase in IRA balances compared to the previous year, it is important to remember that building a strong nest egg takes time. If your balance has recently declined, remain positive and focus on the steps you can take to grow your IRA moving forward.