{"id":200256,"date":"2025-12-24T20:44:07","date_gmt":"2025-12-24T20:44:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/200256\/"},"modified":"2025-12-24T20:44:07","modified_gmt":"2025-12-24T20:44:07","slug":"retirement-accounts-roared-back-in-2025-after-punishing-losses-during-biden-years-study","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/200256\/","title":{"rendered":"Retirement accounts roared back in 2025 after punishing losses during Biden years: study"},"content":{"rendered":"

After four bruising years in which inflation and declining bond markets slammed Americans\u2019 nest eggs, retirement accounts made a big comeback in 2025 \u2014 regaining much of what was lost while feeling how deeply policy shifts can hit workers\u2019 savings.<\/p>\n

The average 401(k) balance jumped about $23,200, or 16.9%, from the first quarter through the third quarter of 2025, according to a new study by E.J. Antoni<\/a>, a senior fellow at the conservative Unleash Prosperity think tank.<\/p>\n

After adjusting for inflation, that gain still came to roughly $20,700, or 15.1%.<\/p>\n

Cooling inflation and a rebound in bond markets helped drive a sharp comeback in Americans\u2019 retirement accounts in 2025 after years of losses, according to a study. Dragana Gordic \u2013 stock.adobe.com<\/p>\n

The rebound followed a painful stretch from the first quarter of 2021 through the first quarter of 2025, when the average 401(k) barely rose in nominal terms and actually fell sharply after inflation, the study found.<\/p>\n

What changed this year was a big slowdown in inflation and \u201ca real turnaround in bond markets,\u201d Antoni told The Post in a Wednesday phone interview.<\/p>\n

\u201cThe previous one-two punch that had knocked out people\u2019s retirement accounts now turned into a one-two blessing, if you will,\u201d he said.<\/p>\n

Antoni credited President Trump\u2019s policies for the turnaround, saying: \u201cThis is a total reversal as the Trump administration unleashes DOGE<\/a> and reduces government spending and therefore borrowing as they engage in tax and regulatory reform, as they promote pro-energy policies.\u201d<\/p>\n

Trump, a Republican, has focused on 401(k) accounts throughout his terms in office, signing an executive order in August <\/a>that would make it easier to include alternative assets like cryptocurrencies and real estate in retirement plans.<\/p>\n

\u201cMy Administration will relieve the regulatory burdens and litigation risk that impede American workers\u2019 retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement,\u201d he said in a statement at the time.<\/p>\n

CRUSHING CONDITIONS FOR BONDS<\/p>\n

Under former President Joe Biden, a Democrat, cumulative inflation ran 21.2% over four years<\/a>, eroding purchasing power and forcing the Federal Reserve into its fastest rate-hiking cycle in decades, Antoni\u2019s report noted.<\/p>\n

Those rate increases crushed bonds \u2014 a core holding in retirement portfolios \u2014 delivering what the economist described as the worst four-year run for average bond returns in a century.<\/p>\n

The average 401(k) balance jumped more than $23,000 in 2025 as stocks and bonds delivered positive real returns, according to a new report. luciano \u2013 stock.adobe.com<\/p>\n

For savers nearing retirement, the damage was especially severe.<\/p>\n

\u201cAs people get closer and closer to retirement, they allocate more and more of their savings into fixed income assets,\u201d said Antoni, who\u2019s also chief economist at the Heritage Foundation.<\/p>\n

\u201cIronically, the people who thought they were in the safest position were the ones who suffered the most.\u201d<\/p>\n

While stocks posted solid headline gains during much of Biden\u2019s term, inflation quietly hollowed them out. Antoni noted that roughly a third of average equity returns during those four years were from inflation.<\/p>\n

\u201cIt\u2019s not just how big is my retirement account \u2014 it\u2019s what can my retirement account buy me after I finish working,\u201d he said.<\/p>\n

The past year saw markedly different economic conditions. Inflation has cooled, interest rates have stabilized and both stocks and bonds have delivered positive real returns.<\/p>\n

The study found aggregate 401(k) balances topped $10 trillion for the first time, while pension plan assets surged, as well, in the third quarter of 2025.<\/p>\n

Near-retirees were hit hardest during the bond market\u2019s worst four-year stretch in a century as inflation and rising rates gutted fixed-income portfolios. piter2121 \u2013 stock.adobe.com<\/p>\n

Total pension balances rose to about $33.2 trillion by the third quarter of 2025 \u2014 an inflation-adjusted increase of roughly $2.7 trillion, or 9%, that mostly offset losses from the prior four-year period, according to Antoni\u2019s report.<\/p>\n

The simultaneous damage to both stocks and bonds during the earlier period was historically rare, he said.<\/p>\n

\u201cThere are literally only four years where you have both average bond returns and average equity returns negative over the last century,\u201d Antoni observed.<\/p>\n

\u201cThe worst of those was 2022.\u201d<\/p>\n

Despite the strong comeback, many savers are still not fully whole. Antoni\u2019s analysis shows that the real losses suffered during the Biden years wiped out nearly 95% of the gains from Trump\u2019s first term.<\/p>\n

Antoni noted that people who thought $1 million was enough for retirement now realize they need $1.2 to $1.3 million due to the higher cost of living<\/a>.<\/p>\n

The gains in 2025 have dramatically reduced that gap \u2014 but not eliminated it entirely.<\/p>\n

\u201cI think people probably feel like they\u2019ve been spinning their wheels,\u201d Antoni said, noting that many people continued contributing to their plans throughout the period he studied, yet still lost ground after inflation.<\/p>\n

After inflation eroded purchasing power for years, retirement savers saw meaningful gains in 2025 as price pressures eased. adrian_ilie825 \u2013 stock.adobe.com<\/p>\n

\u2018BAD FISCAL POLICY\u2019 BLAMED<\/p>\n

He attributed the reversal largely to changes in fiscal and monetary conditions, arguing that slowing government spending and borrowing have eased inflation pressures and improved market stability.<\/p>\n

\u201cFailed monetary policy is a big component of the business cycle we\u2019re seeing right now, and the reason we got that bad monetary policy was bad fiscal policy,\u201d the economist said, taking a dig at the Biden administration.<\/p>\n

He cautioned that the gains are not guaranteed to last if Washington returns to heavy spending, aggressive regulation or policies that drive up energy costs.<\/p>\n

\u201cReturning to those failed policies would return us to the negative effects we saw the first time,\u201d Antoni said.<\/p>\n

Inflation, he added, remains the biggest long-term threat to retirement security.<\/p>\n

\u201cWhen you have inflation, it is instantly diminishing the value of your dollar, including all the dollars you have in retirement,\u201d Antoni said.<\/p>\n

Still, he does not see signs of the kind of runaway price increases that would quickly wipe out the 2025 gains.<\/p>\n

SAVINGS SAID TO REMAIN KEY<\/p>\n

Looking ahead, he said the single most important factor for individual savers remains how much they are able to put away, even as policy decisions shape the broader environment.<\/p>\n

Despite a strong rebound this year, many Americans are still working to recover purchasing power lost during the inflation surge. wifesun \u2013 stock.adobe.com<\/p>\n

\u201cThe number-one thing that drives your 401(k) balance is how much you\u2019re saving,\u201d Antoni said, adding that market returns ultimately depend on whether government policies \u201cget out of the private sector\u2019s way.\u201d<\/p>\n

For now, the economist said, the data show meaningful progress \u2014 and a stark reminder of how quickly retirement fortunes can rise or fall.<\/p>\n

\u201cWe\u2019ve made fabulous progress this year,\u201d he said.<\/p>\n

\u201cBut what the data also tell us is that we still have more to go. We still have some lost ground before people are made whole.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"After four bruising years in which inflation and declining bond markets slammed Americans\u2019 nest eggs, retirement accounts made…\n","protected":false},"author":2,"featured_media":200257,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[2169,910,138,246,1943,3508,111,139,69,244,245,643],"class_list":{"0":"post-200256","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-401k","9":"tag-bonds","10":"tag-business","11":"tag-finance","12":"tag-inflation","13":"tag-interest-rates","14":"tag-new-zealand","15":"tag-newzealand","16":"tag-nz","17":"tag-personal-finance","18":"tag-personalfinance","19":"tag-stocks"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/200256","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=200256"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/200256\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/200257"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=200256"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=200256"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=200256"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}