Workers Make Retirement a Priority
Americans continue to fund workplace savings plans despite weak economy and volatile market
American workers are continuing to contribute to their workplace savings plans despite current market volatility, according to a report by Fidelity Investments. Based on analysis of Fidelity's 16,723 corporate defined contribution plans representing 11.5 million participants, Fidelity found the average contribution amount increased in the first half of 2008 compared with the same period last year. Across all contributing Fidelity participants, the average pre-tax amount employees contributed in the first half of 2008 increased by 1.4 percent to $3,187 compared with $3,142 in the first half of 2007. When looking at continuous participants or employees who contributed to the same workplace savings plan in both the first half of 2008 and 2007, the average pre-tax contribution increased by 7.0 percent to $3,512 in the first half of 2008 compared to $3,283 in the first half of 2007.
"There is no doubt that American workers are feeling the pressure from escalating energy and food prices as well as a slumping real estate market, but the majority are making retirement a priority and staying the course," said Scott B. David, president of retirement services at Fidelity Investments. "What we're seeing in the first half of this year is similar to what we saw during the last period of market volatility that began in 2001. During that turbulent market period, workers also continued to fund their workplace accounts, recognizing the importance of saving for retirement even during a down market."
Account Balances Decreased 7.5% in the Past 12 Months Due to Market Declines
While workers continued to fund their workplace savings accounts, the average account balance was down 7.5% to $64,000 at the end of June 2008 from $69,200 at the end of June 2007, due to market impacts. However, the average account balance for those employees who stayed in their plans for both years was down less than 1 percent to $71,500 at the end of June 2008 from $72,000. During this same time period, the S&P 500 declined nearly 15 percent.
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