Most of us assume that in tough economic times, employees tend to contribute less to their retirement funds, and maybe that’s what you’re seeing in your organization. But what really is normal during tough times? And how can you tell if your employees contributions are in the range of normal? Fidelity Investments looked at 17,000 plans and came up with an answer.
Fidelity studied contribution patterns the first half of this year for 11.5 million workers who participate in independent and employer-sponsored plans, such as 401(k)s, and compared them with the contributions in the first half of 2007.
Here’s what shook out:
- On average, contributions to all types of plans increased 1.4%, to $3,187, compared with $3,142 in the first half of 2007.
- The employer-sponsored plans showed an even bigger jump; for employees who contributed to an employer-offered 401(k) or a similar plan in both the first half of 2008 and 2007, the average pretax contribution increased by 7%, to $3,512, in the first half of 2008.
- Loans on 401(k)s dropped a bit, from 19.9% in the first half of ’07 to 19.4% in the first half of ’08.
- And in another study by the Principal Financial Group said that only 3% of workers they questioned indicated they’d reduced retirement contributions because of economic pressure.
So, if your employees are “normal,” you should see little change – except maybe an increase – in their retirement contributions. Click here to see more on the study.