subject: Third Quarter Rise In 401k Account Balances [print this page] The average growth of 401K account balances in the third quarter of 2010 was pegged at 9%, in line with the profit increases investors made due to favorable stock market conditions, said mutual fund provider Fidelity Investments.
However, the impact of overall investment growth on the economy was somewhat diminished as hardship loans on 401K savings accounts and other retirement savings venues also increased. The latter is one major indicator that the effects of the recession are still felt by many people, especially those who add to the high unemployment figures in the country at present.
Despite the considerable increase in account balances, it still hasn't reached from the peak average amount of $70,000 per individual participant reached in 2007's third quarter, says the country's largest 401K plan administrator. For the third quarter of this year, Fidelity's data was expected as the Standard and Poor index shot up by 11%, wherein 401K balances were established at an average amount of $67,000 at the end of September. This figure also increased by more than $5,000 from approximately $61,000 before the beginning of July.
The increases in account balances was attributed by experts to higher profits and investment growth, as well as more disciplined saving and spending behavior among older workers. On average, 401K participants put more than 8% of their paychecks into their retirement savings. Also, more workers upped their distribution deferrals (4.2%) as opposed to decreasing these (3.1%).
One damper on the third quarter rise in 401K balances is that loans went up slightly in the same period, showing that workers are still banking on their retirement savings to cover certain expenses, such as items in the household budget and bigger expenses like college tuition. All in all, more than 22% of all account holders took loans from their 401Ks, up by 0.3% from the second quarter and more than 1% from the previous year.
