Nearly all Americans watched their 401(k) balance dwindle in 2008. Some people toss their 401(k) statements directly into a drawer, thinking it’s better not to dwell on the losses. But if you’re the type of person who likes to pore over the downward trend graphs, here’s a snapshot of the national 401(k) losses.
The median 401(k) rate of return in 2008 was negative 28.3 percent, according to a study of 2.7 million employees eligible for 401(k) plans by human resources consulting firm Hewitt Associates. The average 401(k) balance dropped from $79,600 in 2007 to $57,200 at the end of 2008. Only 11 percent of employees broke even or saw a gain in their 401(k) accounts, while about 44 percent of 401(k) participants lost 30 percent or more of their savings. Workers in their 50s suffered the worst losses.
Average 401(k) Balance by Age Group
Age 2007 Balance 2008 Balance
20s $9,190 $6,690
30s $40,990 $27,360
40s $93,350 $62,580
50s $138,660 $99,420
60+ $115,700 $93,470
Source: Hewitt Associates
Despite the catastrophic losses, participants continued to save. Just 5 percent of 401(k) participants stopped contributing in 2008. The average 401(k) contribution rate dropped only slightly from 7.7 percent in 2007 to 7.4 percent in 2008. About the same number of employees increased their savings rate last year (15.4 percent) as decreased it (14.9 percent).
Also find out: Is Your 401(k) Riskier Than Other People Your Age?