Saving for retirement, of course, is a long-term process. Along the way, there may be bumps in the road. In 2008 and 2009, the economic crisis tested the mettle of both experienced and inexperienced investors. Retirement account balances declined, often precipitously. The Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) team regularly to analyze retirement savings data. One of the key metrics EBRI and ICI offer the financial services community and the population at large is the ability to look at data over a longer period. Account balances of 401(k) participants provides a prime example, as numbers may be skewed due to frequent job changes or large numbers of new employees.
EBRI and ICI get around this obstacle by looking at what they call a "consistent group" of participants. In other words, to get a more accurate view of the impact of the economic downturn on retirement savings, EBRI and ICI look at the figures for those participants who remained in the same plan from 2007 through 2011. For this group, there was good news - while there was a sharp drop in 2008, account balances rose and then some for those who remained in their employer's plan. In 2007, the average account balance for this consistent group was $76,534. In 2008, this figure plummeted to $49,912. By the end of 2011, the rebound had reached to an average balance of $94,482. The report contains other interesting data as well, such as breaking down the balances by tenure with the employer and by age, as well as looking at asset allocation and the increasing concentration on equities.
Blog Author - Ken Felsher
With over 25 years of writing, editing, and research experience. I enjoy sharing with my readers my love of working with content on a variety of subjects.
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