To: Wharf Rat who wrote (38545 ) 2/26/2013 6:09:16 PM From: Wharf Rat 1 Recommendation Respond to "How well did all those better return plans fare in '08-'09?"401(k) losses from the economic crisis: During 2008, major U.S. equity indexes were sharply negative, with the S&P 500 Index losing 37.0 percent for the year, which translated into corresponding losses in 401(k) retirement plan assets. But how individual 401(k) participants are affected by the crisis is largely determined by their account balance, age, and job tenure. Impact varies by account balance: This Issue Brief estimates changes in average 401(k) balances from Jan. 1, 2008, to Jan. 20, 2009, using the EBRI/ICI 401(k) database of more than 21 million participants. Not surprisingly, how the recent financial market losses affect individual 401(k) account balances is strongly affected by the size of a participant's account balance. Those with low account balances relative to contributions experienced minimal investment losses that were typically more than made up by contributions: Those with less than $10,000 in account balances had an average growth of 40 percent during 2008, since contributions had a bigger impact than investment losses. However, those with more than $200,000 in account balances had an average loss of more than 25 percent. Impact varies by age and job tenure: 401(k) participants on the verge of retirement (ages 56–65) had average changes during this period that varied between a positive 1 percent for short-tenure individuals (one to four years with the current employer) to more than a 25 percent loss for those with long tenure (with more than 20 years). ebri.org
