Stock market's fall has wiped out $3 trillion in retirement savings this year


By Irina Ivanova, MoneyWatch

CBS News - June 16, 2022


The U.S. stock market rout that has put U.S. equities in a bear market isn't just reducing the net worth of billionaires like Elon Musk and Jeff Bezos. It's also taking a toll on Americans' retirement savings, wiping out trillions of dollars in value.


The selloff has erased nearly $3 trillion from U.S. retirement accounts, according to Alicia Munnell, director of the Center for Retirement Research at Boston College. By her calculations, 401(k) plan participants have lost about $1.4 trillion from their accounts since the end of 2021. People with IRAs — most of which are 401(k) rollovers — have lost $2 trillion this year.


This year's stock slump is the most severe market downturn since March of 2020, when COVID-19 erupted in the U.S. Historically, 401(k) investments take about two years after a market decline of this size to regain their previous value.


"Anybody who has to retire when the market is down is in a bad position," Munnell said.


"Younger people, you can kind of wait it out — these things have come back time and time again," she added. "But people who use their retirement money to support themselves really suffer in this kind of event."


Bubble losing air


Retirement accounts are the main channel through which most Americans are exposed to the ups and downs of the stock market. Nearly three-quarters of all 401(k) money is held in stocks, according to a Vanguard report from 2021. This year it's been mostly down: The S&P 500 has sunk 22%, the Dow Jones Industrial Average has lost nearly 13% and the Nasdaq Composite has fallen more than 30%...


Paltry 401(k) savings ...


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