NCPA - National Center for Policy Analysis

Retirement Savers Who Didn't Blink Saw Big Gains

August 23, 2011

For 401(k) investors who kept with their equity allocation and continued to contribute to their plan as the financial markets went into free-fall in late 2008, their average account balance grew by 64 percent in the period from October 1, 2008, through June 30, 2011.  The average account balance grew just 2 percent in that time period for retirement savers who moved their money entirely out of equities between October 1, 2008 and March 31, 2009, and stayed out of equities through June 2011, according to a Fidelity Investments study, says Andrea Coombes, MarketWatch's personal finance editor.

  • Some savers exited equities during the 2008 downturn, but then jumped back in at some point: Their account balances grew by 25 percent on average.
  • The percentage change in average account balance includes the workers' contributions plus market gains and losses.
  • The majority of plan participants stuck with their game plan -- just 1.6 percent of the participants studied shed their equity positions, according to the study.
  • Another 1.4 percent of people stayed in equities but stopped contributing to their plan in the October 2008 through March 2009 period.
  • Account balances for those plan participants rose 26 percent on average, through June 30, 2011.

Source: Andrea Coombes, "Retirement Savers Who Didn't Blink Saw Big Gains," MarketWatch, August 18, 2011.

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