Finance News & Insights

How much of a hit are 401(k) balances really taking?

With the plunge the stock market took this fall and the roller-coaster ride ever since, retirement plan balances are taking a beating. But what’s the real damage?

These new benchmarks from Hewitt Associates can give you a good reality check. The good news? While some folks have lost as much as 30% of their nest eggs, most people haven’t taken nearly that big of a hit. The average drop is 14%.

Here’s more on where we are now, compared with a year ago:

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As for the news that people are panicking and pulling out of their retirement plans, you should know that’s probably a bit of an exaggeration. Just 4% of employees have terminated their 401(k) plan contributions altogether.

If you’re seeing a significantly higher number than that, you’ll want to act fast.

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  • Bert Stinebaugh

    Sorry, but I don’t see how this can be correct. The average plan GREW by 16% in 2008? Even with new contributions and matching contributions, the numbers don’t make sense. The stock market was off more than 30% in calendar 08, with the S&P 500 down 39%. Please explain how the average balance would increase by such a large percentage in such a terrible market. What percent of 401k assets are invested in stocks?

    Thanks.
    Bert Stinebaugh

  • Jennifer Azara

    Bert – you have a great eye. Good catch. The years on the chart were mistakenly reversed. The average balance for 2008 was $68,000, down from $79,000 in 2007.

    We apologize for the error. Thanks for keeping us honest.

    Jennifer Azara
    Editor
    CFO Daily News

  • John Rav

    I don’t believe that this takes into account additional employee contributions made in 2008, in which case the percentage decrease could very well be much greater. If you started a year with $79k, contributed $5k, and ended up at $68k, the decrease is actually over 20%, not 14%…