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Retirement savers have been following generic financial advice — according to Fidelity — and that’s a good thing right now

The coronavirus crisis has upended many Americans’ finances, but some investors are ‘staying the course’

Many retirement savers stuck to their investment plans, or contributed more, last quarter, according to Fidelity Investments.

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At a time of heightened uncertainty — about health, the economy and personal financial status — retirement savers didn’t falter, at least according to first-quarter data Fidelity Investments released on Friday.

Not only did 401(k) contribution rates remain steady at an average of 8.9% during the first quarter of 2020, which was marked by extreme market volatility and the start of a bear market, but 15% of savers increased their contributions, according to Fidelity, the Boston-based financial firm, which analyzes its investors’ data every quarter. Individual retirement account (IRA) holders increased their contributions 10% year-over-year, with an average deposit of $3,300 last quarter.

Retirement savers also opened new accounts more than ever before — at least 407,000 IRAs were created in the first quarter, Fidelity found.

“It was encouraging to see that many investors stayed the course and did not make drastic changes to their asset allocations,” Kevin Barry, president of Workplace Investing at Fidelity Investments, said in a statement.

See: How can I protect my 401(k) from a coronavirus-driven market downturn?

The coronavirus crisis has jolted economies and individuals, leaving people around the world worried about their health and wealth. Nearly 870,000 Americans have confirmed cases of the coronavirus, and 50,000 people have died from the disease, according to Johns Hopkins’ Coronavirus Resource Center. States and cities have shut down businesses, schools and events across the country, causing job losses, wage reductions and anxiety about how to make ends meet for the foreseeable future. Unemployment claims have reached record highs, with 26 million American workers filing for unemployment since mid-March.

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Market volatility has also been unusually high, with significant drops and upticks bringing the stock indexes in and out of bear territory.

Naturally, the downturn caused retirement account balances to drop. The average 401(k) balance saw a $91,400 drop, down 19% from the record high $112,300 in the last quarter. The average IRA saw an average loss of $98,900, or a 14% drop from the last quarter. The average 403(b) or tax-exempt account balance was $75,700 lower, down 19% from the year-ago period.

Some retirement savers may hear the sound of a bear market and try to move some of their portfolios away from equities, which hold more risk than conservative funds like bonds. But most Fidelity investors did not waver. About 7.3% of 401(k) account holders made a change to the asset allocation of their 401(k) plans, which is still an increase from 5.2% in the fourth quarter of 2019. A majority — 60% — of the people who made a change only did so once in the first quarter.

Other investment firms, including Charles Schwab SCHW, +0.65% and Vanguard, said earlier this year their investors were handling the volatility similarly.

Employers continued to contribute to workers’ 401(k) plans, with a slight contribution increase from 4.6% to 4.7% in the last quarter, Fidelity found. But that gain may be temporary — citing economic turmoil, some companies have announced their plans to halt their matches altogether.

Also see: How do you know how much you can afford to withdraw from your retirement accounts?

The federal government passed the CARES Act last month in an attempt to financially assist Americans and companies during these hard times. The law provided stimulus checks to eligible individuals, increased unemployment pay and offered loans to small businesses. One provision also expanded the amount retirement savers can borrow from their 401(k) plans or withdraw from their retirement accounts as a hardship distribution, if the reason was linked to the coronavirus (such as a job loss or sickness in the family).

With all going on in the world, hardship withdrawals increased, but barely, with 1.4% of people taking a hardship withdrawal from their 401(k) in the first quarter, according to Fidelity. That’s a minimal jump — in the first quarter of 2019, 0.9% people took a hardship distribution, the firm said. Meanwhile, the number of people taking a new 401(k) loan slightly dropped year-over-year, from 2.6% in 2019 to 2.3% in 2020.

Much of the damage done from this pandemic is still unknown. Companies’ stocks have fallen, home sales have slumped and if lockdowns continue, more jobs will be lost. There was already an impending retirement crisis in the U.S., experts said, and the challenges the coronavirus causes will only make it worse — especially when people are no longer able to contribute to their plans, must begin drawing down their nest eggs and claim Social Security earlier than planned because of an unexpected early retirement or sickness.

During these stressful times, financial advisers typically suggest investors try to remain calm and follow, or create, a financial plan to get through the dark moments. Having a plan already in place can deter excessive stress, though individuals seeking financial guidance still have time to find and work with a professional during the pandemic.

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