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Wealth Enhancement Group Senior Vice President Nicole Webb provides insight on building a retirement fund on “Making Money.”
The average balance in employer-sponsored retirement contribution plans plunged more than 20% last year, according to new data from Vanguard Group.
Vanguard, which tracks about 5 million retirement accounts, found the average account balance for 401(k)s and 403(b)s was $112,572 in 2022 – down nearly $30,000 from the previous year.
"Vanguard participants’ average account balances decreased by 20% since year-end 2021, driven primarily by the decrease in equity and bond markets over the year," the report said.
One-third of account holders actually had a balance of less than $10,000 and about one-quarter held more than $100,000. Just 12% had a balance of $250,000 or higher.
A FED PAUSE LIKELY WON'T HELP STRUGGLING CONSUMERS
Vanguard found the average account balance for 401(k)s and 403(b)s was $112,572 in 2022 down nearly $30,000 from the previous year. (iStock / iStock)
At the same time, a growing number of Americans tapped their retirement accounts to cover a financial emergency as high inflation raged.
About 2.8% of workers participating in employer-sponsored 401(k) plans made a so-called "hardship" withdrawal in 2022, according to the report. That marks a major increase from the 2% rate recorded before the pandemic began and is also up from the 2.1% reading in 2021.
Hardship withdrawals allow workers to tap their 401(k) for an "immediate and heavy financial need."
THE HOUSING RECESSION ISN'T OVER YET
Individuals who make these types of withdrawals owe income tax on the money and could be hit with a 10% early withdrawal fee if they are under the age of 59½. However, the penalty can be waived if workers provide adequate evidence that the money is being used for a qualified hardship, such as a medical expense.
The Bureau of Labor Statistics is expected to release August consumer price index figures on Sept. 13, 2022. (Joe Raedle/Getty Images / Getty Images)
A person who takes a hardship withdrawal also cannot pay it back to their 401(k) and cannot roll that money into another retirement savings account.
The increase in workers tapping their 401(k)s for emergency purposes comes as they confront high inflation that has rapidly eroded their purchasing power.
The government reported this week that the Consumer Price Index, a key measure of inflation, rose 4% in May from the previous year, the smallest increase in more than two years. While that is down from a peak of 9.1% hit last summer, it remains about twice the Fed's target 2% rate.
Other parts of the report also pointed to a slower retreat for inflation. Core prices, which exclude the more volatile measurements of food and energy, climbed 0.4%, or 5.3% annually.
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Americans are increasingly relying on their savings and racking up credit card debt in order to pay for necessities.
Household debt hit $17 trillion at the beginning of 2023, according to Federal Reserve data, and a growing number of households fell behind on payments for several types of loans.
Donald Trump’s ‘big, beautiful bill’ has passed and he’s due to sign it into law on Independence Day. Mark Stone and David Blevins discuss how the bill will supercharge his presidency, despite its critics.
They also chat Gaza and Ukraine, as Donald Trump meets with freed Israeli-American hostage Edan Alexander and talks to Vladimir Putin.
If you’ve got a question you’d like the Trump100 team to answer, you can email it to trump100@sky.uk.
Image: Liverpool’s captain Virgil van Dijk. Pic: Reuters
Image: Liverpool’s Ryan Gravenberch and Cody Gakpo (right) arrive at the funeral of Diogo Jota and Andre Silva. Pic: PA
Jota, 28, leaves behind his wife of only 11 days, Rute Cardoso, and three young children.
His younger brother, 25, was an attacking midfielder for Penafiel in the second tier of Portuguese football.
Liverpool manager Arne Slot, captain Virgil Van Dijk and teammates including Andy Robertson, Conor Bradley, Ryan Gravenberch, Cody Gakpo, Curtis Jones, Darwin Nunez and Joe Gomez were seen at the service.
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Former teammates Jordan Henderson, James Milner and Fabinho were also there.
Van Dijk carried a red wreath with Jota’s number 20, while Robertson had a wreath featuring number 30, Silva’s number at Penafiel.
Image: Manchester United and Portugal player Bruno Fernandes. Pic: PA
Image: Liverpool’s captain Virgil van Dijk and Liverpool’s player Andrew Robertson. Pic: Reuters
Some of Jota’s teammates in the Portuguese national side also attended, including Bruno Fernandes, of Manchester United, Ruben Dias and Bernardo Silva, of Manchester City, Joao Felix and Renato Veiga, of Chelsea, Nelson Semedo, from Wolves, Joao Moutinho and Rui Patricio.
Ruben Neves was one of the pallbearers after flying in from Florida where he played for Al Hilal in the Club World Cup quarter-final on Friday night.
‘More than a friend’
In a post published on Instagram before the service, he told Jota he had been “more than a friend, we’re family, and we won’t stop being that way just because you’ve decided to sign a contract a little further away from us!”
Jota’s fellow Liverpool midfielder, Alexis Mac Allister, said on Instagram: “I can’t believe it. I’ll always remember your smiles, your anger, your intelligence, your camaraderie, and everything that made you a person. It hurts so much; we’ll miss you. Rest in peace, dear Diogo.”
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Porto FC president Andre Villas-Boas and Portugal national team manager Roberto Martinez were also in attendance.
‘With us forever’
Speaking after the ceremony, Martinez said the period since their deaths had been “really, really sad days, as you can imagine, but today we showed we are a large, close family.
“Their spirit will be with us forever.”
The service was private, but the words spoken by the Bishop of Porto, Manuel Linda, were broadcast to those standing outside the church.
He told Jota’s children, who were not at the service, that he was praying for them specifically, as well as their mother and grandparents.
“There are no words, but there are feelings,” he said, adding: “We also suffer a lot and we are with you emotionally.”
The brothers died after a Lamborghini they were travelling in burst into flames following a suspected tyre blowout in the early hours of Thursday morning.
No other vehicles are said to have been involved in the incident.
Liverpool have delayed the return of their players for pre-season following Jota’s death and players past and present paid tribute to him and his brother on social media.
Hidden among the majestic canyons of the Utah desert, about 7 miles from the nearest town, is a small research facility meant to prepare humans for life on Mars.
The Mars Society, a nonprofit organization that runs the Mars Desert Research Station, or MDRS, invited CNBC to shadow one of its analog crews on a recent mission.
“MDRS is the best analog astronaut environment,” said Urban Koi, who served as health and safety officer for Crew 315. “The terrain is extremely similar to the Mars terrain and the protocols, research, science and engineering that occurs here is very similar to what we would do if we were to travel to Mars.”
SpaceX CEO and Mars advocate Elon Musk has said his company can get humans to Mars as early as 2029.
The 5-person Crew 315 spent two weeks living at the research station following the same procedures that they would on Mars.
David Laude, who served as the crew’s commander, described a typical day.
“So we all gather around by 7 a.m. around a common table in the upper deck and we have breakfast,” he said. “Around 8:00 we have our first meeting of the day where we plan out the day. And then in the morning, we usually have an EVA of two or three people and usually another one in the afternoon.”
An EVA refers to extravehicular activity. In NASA speak, EVAs refer to spacewalks, when astronauts leave the pressurized space station and must wear spacesuits to survive in space.
“I think the most challenging thing about these analog missions is just getting into a rhythm. … Although here the risk is lower, on Mars performing those daily tasks are what keeps us alive,” said Michael Andrews, the engineer for Crew 315.