Retirement Wealth Grew Despite Recession

Although there were major market and economic shocks in 2008 and 2009, retirement plans savings grew for most participants. Vanguard’s The Great Recession and 401(k) Plan Participant Behavior study also concluded that participant saving and investment behavior returned to pre-recession benchmarks in 2010.

The average account balance of the three million participants studied rose to $79,077 last year, a 17 percent upward change since 2005. More than 90 percent of participants experienced a positive change in their account balance during this period.

About two percent of active participants stopped contributing to their retirement plan in 2010, which is consistent with the figures for prior years.

Allocations of contributions and assets changed little between 2005 and 2010. Participant account balances were invested 71 percent in equities in 2005 and 68 percent in 2010. Contributions in 2010 were invested in equities at a rate of 70 percent, versus 71 percent in 2005.

While loan activity rose in 2009 and 2010, it returned to pre-recession levels found in 2005. Hardship withdrawals rose 49 percent over the 2005-2010 period, but still averaged only 2.2 withdrawals per thousand participants in 2010, compared to 1.5 per thousand in 2005.

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Kmotion, Inc., P.O. Box 1456, Tualatin, OR 97062; 877-306-5055;

© 2011 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance, nor as the sole authority on any regulation, law, or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.