Why Gen Zers’ 401(k)s Didn’t Lose Money in 2022
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Here's your money briefing for Monday, March 13th. I'm J.R. Whelan for The Wall Street Journal. It's no surprise that as the stock market entered bear market territory last year, most Americans' 401k retirement accounts took a serious hit. What is surprising is that one group in particular came out ahead, Gen Z.
The people at Fidelity tell us that while the average nest egg in Fidelity accounts lost 23% in 2022, Gen Z workers, who are typically born between 1997 and 2012, posted a gain of 14%.
So how'd they do it? The Wall Street Journal of Personal Finance team's Oyin Adedoyin will explain it for us after the break.
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Most investors saw their retirement accounts take a beating last year, except for one group, Gen Z, people born after the mid to late 90s. So how do people in their 20s and early 30s with relatively little investing experience wind up coming out ahead? Oyen Adedoyen from the WSJ's personal finance team joins us to go through the numbers. Hey, Oyen, thank you very much for being with us.
What surprising Fidelity finding kicked off this episode about Gen Z 401(k) performance?
Thanks for having me, JR.
So, Oyen, tally up the score for us. How did Gen Z investors do compared to other groups?
Yeah, so somewhat surprisingly, the people at Fidelity tell us that while the average nest egg in Fidelity accounts lost 23% in 2022, Gen Z workers born between 1997 and 2012 posted a gain of 14%.
Wow, that's a pretty big spread. That's pretty remarkable considering the fact that the S&P 500 was down nearly 20% for the year. So how did Gen Z do that? Did they crack some kind of investing code?
No, it wasn't anything like that. It wasn't investment savvy or beginner's luck so much as the good fortune of not actually having that much money invested yet as the markets tanked. And so they had an average balance of about $6,000 compared with $103,900 for all retirement savers with Fidelity accounts.
Oh, so the less money invested, the less damage to be done.
Exactly.
And, you know, we saw sell off after sell off on Wall Street in 2022. It was not pretty. And that could have scared a lot of people away. You know, they might have pulled money out or at least dialed back the amount that they were investing.
Yeah, it was definitely a rough year in the market last year, but Americans don't seem deterred. About 90 percent of investors in the 401k style retirement plans administered by Vanguard Group maintained or increased their savings rate last year. So in my reporting, I've seen that Americans across the board are really prioritizing retirement. their savings accounts.
How much did Gen Z 401(k) balances grow versus the average in 2022?
And when I spoke with folks at Fidelity, they also emphasized this, particularly among Gen Z, who has greater access to internet research related to finance and how to kind of invest, especially when it comes to retirement. And so they're seeing, particularly in this generation that's growing in the workforce, a real commitment to those types of saving plans.
Yeah, that's pretty significant, given the fact that this is all happening up against a pretty challenging economic climate.
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