Even as meme stocks surge, retirement savers stay vanilla

NEW YORK (AP) — It might seem like everyone is having a wild time shooting for the stars with GameStop and other meme stocks.

But just as day-to-day life for most of us is more mundane than the highlights friends post on social media, the majority of retirement savers are sticking to plain vanilla plans. And they’re doing fine for it.

Consider the 4.7 million accounts that Vanguard keeps records for in 401(k) and similar plans. Most of them did pretty much nothing last year, other than continuing to send a chunk of their paychecks into their savings. Only 10% made a trade at all in their account during the year.

That’s up from 7% a year earlier, as the pandemic roiled investments and triggered the fastest bear market in history. But 90% of those retirement savers not moving their money from one investment to another stands in sharp contrast to the frenzy surrounding GameStop’s stock, which an army of traders sent surging by 1,625% in January.

More recently, stocks like AMC Entertainment have had days where they’ve nearly doubled, as a new generation of hyper-online traders rally together on social media to champion the same stocks.

So, what did that boring lack of action get the majority of retirement savers? Record heights.

At Vanguard, the average account balance rose 20% last year to $129,157 as the S&P 500 rebounded from its early-year plunge to rally. Over the longer term, the average balance is up 65% from 2011.

The median balance rose even more strongly: up 30% last year to $33,472. Median means half of all the savers in Vanguard’s survey had balances bigger than that, while half had less.

Savers have been getting less active in trading for years in Vanguard’s survey. In 2004, 20% of accounts were making trades, falling to 7% in 2019.

This slowed-down...