The stock market — which has been soaring ever since the government began shoring up the economy with trillions in COVID stimulus payments — has not failed savers in 401(k) retirement plans and individual retirement accounts (IRAs). And these investors have not failed to remain steady at the helm.

Both 401(k) and IRA balances at the end of the 3Q21 were up 15% from their year earlier balances, with IRAs ending with an average balance of $135,700 and 401(k)s, an average of $126,100, according to Fidelity Investments.

Fidelity data shows that retirement savers have resisted knee-jerk reactions to exit the markets — even in the face of the Dow Jones Industrial Average plummeting 9.99% on March 12, 2020 (its sixth-worst percentage drop in history), at the very start of the COVID-19 pandemic, and its 2.53% decline last Friday, November 26, marking its worst day of 2021.

'Positive Impact of 401(k)s'

Commenting on the healthy balances for 401(k)s and IRAs at the end of the third quarter and savers' ability to stay the course, David Blanchett, managing direcor and head of retirement research at PGIM DC (Defined Contribution) Solutions, tells Newsmax Finance: "This is definitely good news. It demonstrates the positive impact 401(k) plans are having among America's savers. The long-term growth in balances isn't necessarily that surprising, given the positive market performance we've had over the last decade and consistent savings rates among most 401(k) participants."

However, it is that consistency, i.e. staying the course, that Fidelity Investments and other major asset management firms emphasize is the most important factor when planning for a secure retirement.

As Kevin Barry, president of Workplace Investing at Fidelity Investments, puts it: "One of the most important retirement savings behaviors we highlight with customers is to keep a long-term approach and not make changes to a retirement savings strategy based on short-term market events.

"The stock market and economic landscape will shift many times throughout a lifetime, so taking a consistent approach, making steady contributions and maintaining your asset allocation are key to your retirement savings goals," Barry adds.

Drilling down into the results of the third quarter balances that Fidelity custodies in 401(k)s and IRAs, it shows a big uptick in the dollars saved in these accounts from a year prior. The 401(k) and IRA ending balances of $126,100 and $135,700 at the end of the third quarter of 2021, respectively, were $109,600 and $117,700 one year ago.

Gen Z Dives In

A deeper look also reveals that enthusiasm for retirement savings is growing rapidly among Generation Z, which is the generation born between 1997 and 2012. Ranging in age between 9 and 24, obviously, only a few Gen Zers are in the workplace today. Nevertheless, Fidelity found that the number of Gen Z investors across Fidelity's retirement platform reached a record 1.4 million in Q3 — nearly double the number of Gen Z investors from one year ago.

Gen Z investors are appear to understand how a Roth option may be the best one for them, as they are likely to earn more and pay more taxes later in life. Nearly all, 95%, of Gen Zers' contributions to an IRA are pouring into a Roth IRA, according to the Fidelity data. Gen Zers in a retirement plan that automatically enrolls them and puts them into a target-date fund (TDF) are evidently satisfied with that default investment, as the Fidelity data shows that 86% of Gen Z investors in a 401(k) or 403(b) plan, have 100% of their money in a TDF.

'Rise Up'

Despite the ongoing pandemic of the past two years, Kelly Lannan, vice president, young investors, at Fidelity, says that those just entering the workplace grasp the importance of saving for their future: "Over the past two years, we are seeing the next generation of investors rise up and get more engaged with their finances, leading to more than 4.7 million new retail accounts on Fidelity's platform. It's encouraging to see so many young people planning for their future."

Looking out into the next few years, PGIM and other large investment houses have been predicting, for some time now, that stock market returns are likely to become subdued.

As Blanchett puts it, "At PGIM, we believe that future market returns are likely to be lower than they  have been recently, and that participants do need to be prepared for a market pull-back. That being said, I hope the trend continues and that there are new record balances moving into the year 2022!"