Fidelity Investments, a provider of workplace retirement savings plans, released 401(k) data showing that pre-retiree participants who continuously held a 401(k) plan with Fidelity for the past 10 years more than doubled their account balances.
The average account balance for these pre-retirees, aged 55 years or older, rose to $211,300 by the end of the third quarter of this year from $96,000 ten years ago. Pre-retirees with a contribution rate at or above 8 percent this year showed average balances increasing more than 130 percent over the past 10 years to $291,700, from $125,600.
“The past decade was certainly not a lost decade for participants who remained committed to saving even through all of the markets ups and downs,” said James M. MacDonald, president, Workplace Investing, Fidelity Investments. “A disciplined, systematic savings approach in a diversified portfolio has been the key to building a sizable nest egg for many pre-retirees during one of the most volatile decades in history.”
The same group of pre-retirees had a 10-year, average cumulative time-weighted personal rate of return (PRR) of 18.3 percent, while the S&P 500 returned a negative 4.2 percent, the Company said.
According to a release, participants of all ages learned valuable lessons during the recent economic crisis and put those lessons to work during the third quarter of 2010, MacDonald said. For the seventh straight quarter, participants deferred, on average, 8.2 percent of earnings to their 401(k)s. More participants increased their deferral rates (4.2 percent) than decreased (3.1 percent), a pattern of positive savings occurring for six consecutive quarters. Fewer participants allocated 100 percent of their assets to equities at the end of the third quarter (13.1 percent) as compared to the same period a year ago (14.5 percent). Strong market returns combined with solid savings rates resulted in average 401(k) account balances increasing 9.4 percent to $67,600 by the end the quarter, up from $61,800 at the end of the second quarter.
((Comments on this story may be sent to newsdesk@closeupmedia.com))
By materials of Find Articles