Fidelity Investments Q2 2025 retirement analysis<\/a>, 401(k) and 403(b) balances reached new record highs in Q2, climbing more than 8% year-over-year, the highest quarterly increase since Q4 2023. Total average 401(k) savings rates remained consistent with the prior quarter at 14.2%, a record high resulting from an employee contribution rate of 9.5% and an employer contribution rate of 4.8%.<\/p>\nThe account balance rebound resulted in a related rebound in 401(k)-created millionaires, which reached an all-time high with 595,000 individuals in Q2, according to Fidelity.<\/p>\n
Not all advisory clients saw their retirement accounts bounce back into seven-digit territory, however. They may have sat out the market rally for some reason, perhaps having been burned by stocks before, and feel the need to scramble to catch up.<\/p>\n
The first step for those folks, according to Sydney Rutledge, financial advisor at\u00a0Bogart Wealth, is to take their \u201cfinancial house down to the studs\u201d and create a budget.<\/p>\n
\u201cWhen you have a clear picture of your spending, it becomes easier to see how much you can realistically set aside for retirement and where you might be overspending. If you’re able to cut back your spending, those dollars can be reallocated to retirement savings instead. When you feel behind on saving, every little bit counts,\u201d Rutledge said.\u00a0<\/p>\n
Frank Legan, partner and financial advisor at SEIA, believes the key to catching up is to \u201cwork backwards\u201d and focus on \u201cprogress not perfection.\u201d<\/p>\n
\u201cWith the help of an advisor, they can assess how large of a nest egg is needed in retirement, then calculate how much needs to be saved annually at a reasonable rate of return. Don\u2019t be discouraged. Take the first step,\u201d Legan said.<\/p>\n
Common ‘catch up’ mistakes<\/p>\n
\nAndrew Jaffee, wealth management advisor at Apollon Wealth Management, said a common mistake when investors seek to \u201ccatch up\u201d on their retirement saving is sacrificing flexibility or liquidity in pursuit of higher returns or optimal tax efficiency, which may lead to stress or short-sighted decisions.<\/p>\n
\u201cI help clients frame retirement planning as an exercise in balancing priorities \u2014 structuring their cash flow so near-term needs are met while steadily increasing savings \u2014 ensuring they maintain both stability today and momentum toward long-term goals,\u201d Jaffee said.<\/p>\n
Similarly, Bogart\u2019s Rutledge said dialing up the risk on investment choices when facing a shortened time horizon is the most common risk she sees.<\/p>\n
\u201cIt’s easy to fall into the trap of \u2018more risk equals more return,\u2019 but this isn’t always the answer to catching up on retirement savings if your risk tolerance or time horizon doesn’t support a more aggressive portfolio. It’s important to factor in the downsides of taking on more risk in your investments and not just focus on the potential upside,\u201d Rutledge.\u00a0<\/p>\n
Get clients back on track\u00a0<\/p>\n
\nAs for helping clients balance near-term spending needs with long-term retirement goals, Rutledge said her strategy is to take a \u201cbucket approach\u201d with client’s overall asset allocation. Simplistically, this includes a short-term bucket, an intermediate term bucket, and a long-term bucket. The short-term bucket is where the near-term cash flow comes from.<\/p>\n
\u201cWhile a client is working, this bucket is their paycheck, and in retirement, it’s lower risk investments like bonds. Then we turn to the intermediate term bucket, which is where we introduce more equity exposure while still focusing on moderate risk and growth. Lastly, the long-term bucket has the highest exposure of all the buckets to stocks and is typically where we see the most volatility, but also the most growth,\u201d Rutledge said.<\/p>\n
\u201cThis strategy allows to broaden market diversification across asset classes while also balancing near-term spending needs and long-term retirement goals,\u201d Rutledge said.<\/p>\n
Legan, meanwhile, believes it\u2019s all about aligning client resources with their priorities.<\/p>\n
\u201cBalancing living comfortably now with decisions that don\u2019t work against their future selves. Knowledge can lead to comfort,\u201d Legan said.<\/p>\n","protected":false},"excerpt":{"rendered":"Wealth managers discuss what they are doing for clients who say their retirement accounts have not benefitted enough…\n","protected":false},"author":2,"featured_media":139192,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,133,131,132],"class_list":["post-139191","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-ca","tag-canada","tag-finance","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/139191","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=139191"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/139191\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/139192"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=139191"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=139191"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=139191"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}