2022 was a very volatile year for the stock market. And unfortunately, a lot of savers are still seeing lower balances in their retirement plans than they did back in 2021.
But Fidelity just released data on IRA balances for 2022's fourth quarter, and there was some good news in there. Overall plan balances rose from the year's third quarter, even in the face of market volatility.
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The average IRA balance among savers
As of the fourth quarter of 2022, IRA balances sat at $104,000 on average. That's an improvement from the third quarter of the year, when balances sat at $101,900 on average.
That said, we can't overlook the fact that the average IRA balance was $135,600 as of the end of 2021. So clearly, a lot of people are looking at on-screen losses in their retirement plans.
But once the stock market rallies from the events of 2022, there's a good chance IRA balances will come back up. And the fact that they're already higher from one quarter to another is a positive sign.
How to grow your IRA balance
Maybe your portfolio took a particularly large hit in 2022, so you're sitting on an IRA worth a lot less than $104,000. Or maybe you just plain haven't been able to prioritize your IRA contributions, so your balance is substantially lower.
It's important to do what you can to build up a solid nest egg. Not only will Social Security only replace a small percentage of your income once you retire, but the program may have to cut benefits if lawmakers can't find a way to fix its many financial problems. So you may become even more reliant on your personal savings than expected.
If you need to ramp up on the IRA front, one good bet is to put the process on autopilot. Set up an automatic transfer from your checking account to your IRA at the start of the month so that money hits your retirement plan before you get a chance to spend it.
At the same time, think carefully about the things you're spending money on. You might enjoy your daily store-bought lunch, but if it costs you $150 more per month than bagging your lunch instead, well, that's money that could be going into your IRA.
Also, if you're looking to save more in your IRA this year, consider a side hustle and use your earnings from it to fund your account. The gig economy is in good shape, and you might manage to find a side job that allows you to earn a nice added wage without impeding your lifestyle too much.
IRA balances may be down compared to the end of 2021, but on the plus side, they're up from the third quarter of 2022. But if you're well into your career and you don't have anywhere close to $104,000 socked away for retirement, it may be time to reexamine your spending and shift some priorities. If you neglect your IRA for too long, you might sorely regret it once your career comes to an end.
