BOSTON Feb 14 U.S. workers who stayed put in
the same company 401(k) plan for the past decade saw the size of
their accounts quadruple to an average of nearly $200,000,
despite major stock market turmoil, Fidelity Investments said on
The results underscore the stock market's recent resurgence
and how important it is for 401(k) participants to keep
contributing to their accounts, even when their balances
decline, like they did during the height of the financial
crisis. This is good feedback for young workers, too, because
more 401(k) plans automatically enroll them in retirement plans
while escalating their contribution rates each year, experts
Boston-based Fidelity looked at 1.1 million 401(k)
participants who stayed in the same company plan continuously
during the 10-year period that ended Dec. 31. The average
account balance for the 10-year continuous group increased by
324 percent to $199,800 from $47,100, said Beth McHugh, vice
president of market insights at Fidelity.
During the same period, the Standard & Poor's 500 index only
rose 62 percent, showing how important 401(k) contribution rates
are to building up retirement account balances.
Jack VanDerhei, research director of the nonpartisan
Employee Benefit Research Institute, called the Fidelity figures
remarkable. But he said there are even better results to ponder
if you look at participants who are older and have more tenure
in their 401(k) plans than the overall average.
"You're going to find even more amazing results if you slice
the numbers that way," VanDerhei said. "People who have had the
highest ratio of contributions always look best."
Indeed, 401(k) participants ages 55 to 59 in the 10-year
continuous group measured by Fidelity had an average balance of
$251,700 at the end of 2012, McHugh said.
For a broader view of retirement activity, Fidelity's latest
analysis of about 20,500 workplace plans covering 12 million
participants showed that the average 401(k) balance hit $77,300
at the end of 2012. That was an increase of 12 percent from a
The rise in 2012 is less celebratory, though, when you
factor in inflation.
During the first half of 2000, for example, the average
401(k) balance was higher at times than it was at the end of
2012, Fidelity said, using inflation-adjusted figures.
Still, for a 15th straight quarter, more participants
increased their savings rate than decreased it during the final
three months of 2012, Fidelity said.
And McHugh said there are far fewer extreme investors today
than compared to late 2007. A higher percentage of 401(k)
participants are using funds blended with stocks and bonds,
rather than putting most of their money in just stocks.
That's a far cry from the aggressive investing that took
place in 2007, when the allocation to stocks was 65 percent
compared to 52 percent in the fourth quarter of last year,
according to Fidelity's analysis.