In the balance: 401(k) participants lose one-third of their assets

The average 401(k) participant lost nearly one-third of their retirement account assets last year because of the market downturn, according to a report released this morning by the Investment Company Institute and the Employee Benefit Research Institute.
OCT 06, 2009
The average 401(k) participant lost nearly one-third of their retirement account assets last year because of the market downturn, according to a report released this morning by the Investment Company Institute and the Employee Benefit Research Institute. At the end of 2008, the average account balance was $45,519 — a 30% decline compared with the $65,454 average account balance at the end of 2007. This substantial decline factors in contributions by workers and employers to 401(k) plans last year, which were handily offset by declines in most global equity and bond markets. The Standard & Poor's 500 stock index, for instance, fell 38.5% during 2008. The ICI/EBRI report, “401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2008,” was based on a survey of 24 million 401(k) plan participants in 54,765 plans holding $1.1 trillion in assets. “Retirement savers, like most investors, suffered during 2008, one of the deepest bear markets in modern history,” Sara Holden, the ICI's senior director of retirement and investor research, said in a release. “But the growth in account balances among consistent participants over five years highlights the benefits of a regimen of disciplined saving in workplace retirement plans.” Indeed, workers who invested in their 401(k) plans regularly over the five-year period from the end of 2003 through the end of 2008 experienced asset increases at an annual rate of 7.2%, even with the 2008 losses, according to the report. The average account balance of the “consistent” participants, as the report labeled them, rose to $86,513 at the end of 2008, from $61,106 at the end of 2003. Over the past 20 years, 401(k) plans have become the most widespread private-sector employer-sponsored retirement plan in the United States, the report said. In 2008, 49.8 million Americans had the defined-contribution accounts, holding assets of $2.3 trillion.

Latest News

SEC Says Game Service Roblox Part of ‘Active Investigation’
SEC Says Game Service Roblox Part of ‘Active Investigation’

Short sellers previously said the company was under investigation, though Roblox denied allegations.

Musk’s DOGE descends on CFPB with intention to shut it down
Musk’s DOGE descends on CFPB with intention to shut it down

The Consumer Financial Protection Bureau is in the crosshairs of the Republican group that is widely attempting to dismantle government agencies.

Advisor fighting Finra banishment loses $17.7 million dispute with old firm
Advisor fighting Finra banishment loses $17.7 million dispute with old firm

National Securities Corp. sued the advisor in 2020, alleging breach of contract and unjust enrichment.

Job numbers, inflation leaving room for Fed to hold rates
Job numbers, inflation leaving room for Fed to hold rates

Recent data support a measured pace by the Federal Reserve for the year ahead.

Private assets remain hot despite surging stock market
Private assets remain hot despite surging stock market

Financial advisors are still adding alternatives despite the surge in publicly traded stock prices

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.