IRA Balances Are Decreasing. Here Are 5 Tips to Help Keep Your Retirement Savings Stable

If you need some help investing for retirement, you should read this.

Individual retirement accounts (IRAs) are popular retirement accounts because of the perks they offer. These benefits include tax-deductible contributions, the ability to open an IRA with almost any brokerage firm or financial institution of your choosing, and flexibility in what you invest your money in.

Unfortunately, recent data shows that IRA balances are decreasing across the U.S. Here's what you need to know about the decline, as well as about how you can try to keep your investment account balance stable.

What's happening to IRA balances?

According to research from Fidelity Investments, there's been an ongoing decrease in retirement account balances over the past several months.

In the third quarter of 2023, for example, the average IRA balance fell to $101,900. This is 24.9% lower than the average IRA balance of $135,700 during the same time period in 2022. The average 401(k) balance is also down about a quarter compared to a year ago, and the average 403(b) balance is down 21% year over year.

Balances have gone down for three quarters in a row, in large part because of downturns in the market.

The good news, however, is that the number of people with IRAs is going up each year -- especially among millennials and members of Gen Z.

Here's how you can protect your retirement security

Although it's not great news to see IRA balances decline, the reality is that market downturns are part of life and if falling stock prices are to blame for the decrease (rather than people making withdrawals), then a rebound should be inevitable.

Still, if you're concerned about the fact your own balance may be declining, here are five steps you can -- and should -- take to protect your retirement security.

1. Keep investing, even during a market downturn: Although it may be tempting to press pause on investing when stock prices are on the downswing, this is a bad idea. A downturn presents the opportunity to buy shares of stock that are on sale and you don't want to miss out. It's also hard to time the market, so you could miss the recovery and end up having to dive back in when share prices are already really high.
2. Invest for the long term: It's been proven time and again that long-term investing is the most reliable wealth-building path. If you try to day trade or buy stocks to make a quick buck, you are much more likely to end up losing money -- especially in a volatile market.
3. Don't react based on fear: If your investments seem to be performing badly, it's important to stay the course as long as you're confident in them. Otherwise, you could end up selling at a low, locking in losses, and missing out on the gains you would have had as your portfolio recovered.
4. Know how much you need to invest: It's important to make sure you're investing enough to amass your desired nest egg while assuming a reasonable return on investment. You can use savings goal calculators at Investor.gov to determine how much you need to invest to hit your target goals.
5. Maintain an appropriate asset allocation: You should also make sure to build a diversified portfolio that exposes you to an appropriate level of risk for your age.

By following these five tips, you can make sure you'll likely have plenty of money in retirement -- even if you experience lots of market downturns along the way.