US - The average account balance among American workers who consistently held 401(k) accounts from 1999 through 2006 increased at an annual rate of 8.7%, according to a new study.
The research, carried out by the Employee Benefit Research Institute (EBRI), found average account balances rose to US$121,202 at the end of 2006, from $67,760 at the end of 1999, among participants who maintained accounts for the entire period.
Jack VanDerhei, co-author of the study, said the average 401(k) participant had a good year in 2006 because the majority of 401(k) assets were invested in equities and the stock market performed very well last year.
However, he cautioned: “Year-to-year comparisons can vary sharply, which is why it’s far more meaningful to look at how participants’ accounts have performed over time. The data shows that most workers who have continued to save and invest in their 401(k) retirement plans over the past several years have done well, despite ups and downs in the stock market.”
In terms of asset allocation, the EBRI report found that on average, by the end of 2006, about two-thirds of 401(k) participants’ assets were invested in equity securities through equity funds, the equity portion of balanced funds and company stock.
About one-third was allocated in fixed-income securities such as stable value investments in addition to bond and money market funds.
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