If you think public policy doesn’t really affect you or your family, take a quick glance at your retirement account — but sit down first. Those accounts have taken a beating lately because of the misguided policies emanating from Washington, D.C., and the result is a dramatic reduction in wealth for the average American family.
In the first nine months of last year, the average 401(k) retirement plan lost a quarter of its value. And that’s before adjusting for inflation.
In October of last year, I estimated that the average 401(k) plan had fallen from $135,000 at the start of 2022 to $101,000 — a 25% drop and a total loss across all plans of $2.1 trillion. To add insult to injury, inflation had effectively further reduced the value of 401(k) plans by another $6,000, since the dollars in those plans can buy less than before.
With 2022 in the rearview mirror, Fidelity Investments has published its statistics on the average decline of those 401(k) plans in the first nine months of last year, and the loss turned out to be 26%, one percentage point worse than my earlier estimate.
But what caused these drastic losses for Americans? The answer is unwise public policy from Congress, the White House and the Federal Reserve.