The Financial Flash

At-a-glance News for Advisors

Fidelity®’s Q1 2022 Retirement Analysis shows retirement savers are staying the course despite market volatility. Released May 19, the quarterly analysis found that while average account balances decreased (driven largely by the stock market's performance), the total 401(k) savings rate reached record levels, the number of IRAs on Fidelity's platform increased and the percentage of employees with a 401(k) loan dropped for the fourth consecutive quarter. “During periods of economic uncertainty, it's important for retirement savers to stay focused on their long-term savings goals and not make knee-jerk reactions to short-term market events,” said Kevin Barry, president of Workplace Investing at Fidelity Investments. Fidelity® reported the average IRA balance was $127,100 in Q1, a 2% decrease from Q1 2021 and a 6% decrease from last quarter. The average 401(k) balance dropped to $121,700 in the quarter, down 2% from a year ago and 7% from Q4 2021. Among Gen Z savers, who are heavily invested in target date funds, the average account balance only dropped 0.4% from last quarter. As of Q1, 85% of Gen Z savers had all of their 401(k) savings in a target date fund. The average 403(b) account balance decreased 7% to a $107,600, slightly higher than Q1 2021 and a decrease of 6% from last quarter.

 

A new, national Rocket Dollar study shows most Americans want to diversify their retirement accounts. In partnership with The Center for Generational Kinetics (CGK), the award-winning alternative investment platform Rocket Dollar, based in Austin, Texas, has organized a national study aimed at outlining the public's understanding and interest in retirement savings, alternative assets, and ways to invest along with motivational drivers for investing. Among the key findings: 63% of Americans are not sure they can depend on Social Security, motivating them to have retirement accounts. Some 74% of Americans want the option to diversify their retirement accounts to the investments of their choosing. And 69% of younger millennials are interested in investing in alternative assets using a retirement account. “As it currently stands, Social Security is set to run out of funds for full payments by 2034, a year earlier than previously anticipated,” Rocket Dollar noted in a statement. “With retirement looming closer for some demographics, it's unsurprising that Americans are exploring options to secure their financial futures outside of government-funded ventures.”

New research from HerMoney and the Alliance for Lifetime Income finds more than half of women control household finances, investments and retirement planning. Almost all women who reported being in a relationship play a role in managing not only their household finances (94%), but also managing investments (94%), and contrary to popular belief, retirement planning (94%). Women are proud of the financial decisions they've made, according to the first chapter of the State of Women in 2022 study. More than 1,000 women surveyed by HerMoney (a new digital media company focused on improving the relationships women have with money) and the Alliance say they are most proud of engaging with their finances on a regular basis (68%), paying off debt (56%), buying a home (53%) and being able to talk openly about money (53%).

OneAmerica® recently announced a $1 million commitment to activate a uniquely tailored financial literacy program in Central Indiana. In collaboration with The American College of Financial Services, the program will offer practical financial understanding to build a personal relationship with finance and drive economic empowerment, with a focus on narrowing the racial wealth gap. Indianapolis-based OneAmerica® has been a national provider of insurance and financial services for more than 140 years. The innovative program, to be funded over a five-year period, is a state-of-the-art education and empowerment experience that teaches important personal finance concepts. Utilizing The American College of Financial Services' e-learning design and delivery philosophy and building upon The College's financial wellness curriculum originally created for Historically Black Colleges and Universities (HBCUs), the Indiana program will develop into a more regional model. The OneAmerica investment will now help deliver the program to education institutions and nonprofits in Central Indiana.

For 81% of Canadians, the financial world feels more confusing and complex than it did five years ago, according to a new Scotiabank poll. Three-quarters say the accelerated pace of change only adds to feelings of uncertainty. Still, amid the confusion, 77% of Canadians feel well-equipped to make personal finance and investing decisions — with notable areas of exception. The top areas of personal finance that Canadians find most confusing or want assistance with are real estate, digital investing, and emerging technologies, like cryptocurrencies and NFTs, that leave most people feeling clueless. More than half of Canadians (54%) say they've received bad financial advice at least once. At the same time, 1 in 5 Canadians admits to giving financial advice to someone else, even when they weren't sure what they were talking about. "We're in a moment of unprecedented change. There's never been more information coming our way — but not all of it is helpful," says Laura Curtis Ferrera, CMO of Toronto-headquartered Scotiabank. "Since each person's financial reality looks a little different, good advice should never be one-size-fits-all.”

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