Plan Contributions Hold Steady Despite Market Turmoil
August 16, 2008
In the first half of 2008, Americans continued to add to their employer-sponsored retirement plans despite the ongoing market turmoil, according to Fidelity Investments, the nation’s largest plan provider.
Fidelity analyzed 16,723 defined contribution plans with 11.5 million participants and found the average contribution amount edged up by 1.4% in the six months of 2008 compared with the same period last year, to $3,187 from $3,142.
“American workers are feeling the pressure from escalating energy and food prices as well as a slumping real estate market, but the majority are making retirement a priority and staying the course,” said Scott David, president of retirement services at Fidelity Investments.
Nonetheless, Fidelity’s analysis showed that the average DC plan account balance fell 7.5% to $64,000, at the end of June 2008, compared to $69,200 at the end of June 2007. The S&P 500 Index dropped nearly 15% during that period.
Fidelity’s research also revealed a slight increase in hardship withdrawals, a drop in the percentage of participants initiating loans from the DC plans and a 10% decline in the number of employees contributing the maximum amount to their accounts, from mid-2007 to mid-2008.
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