The stock market crash of 2008 wasn’t enough to make people give up on traditional retirement savings plans.
401(k) account balances hit a 10-year high last year, according to data from Fidelity Investments.
The average account balance rose to $71,500, up 11% from the end of 2009.
When the S&P 500 Index dropped 38% in 2008, many thought it could be the death knell for traditional 401(k) plans. But as the data shows, 401(k)s are very much alive and kicking — and people are continuing to defer more money into them.
One-third of the increase in account balances was attributed to participant action — like increases in contributions.
For the seventh straight year more participants increased their total contribution rate than decreased it (6% vs. 3% respectively). On average, participants deferred 8.2% of their salaries to their 401(k) accounts — not including employer matches.
The remaining account balance growth was spurred by market improvements — the S&P 500 rose roughly 13% last year.
That should all come as good news to employers who are trying to ramp up participation in retirement plans. This data gives them a weapon to help fend off workers’ skepticism about investing and the value of 401(k)s.
If that’s not enough, here are some more numbers to hit them with: Since the end of 2000, 401(k) balances have risen by an average of $16,800 — despite what many have called one of the worst recessions since the Great Depression.
