Press coverage of year-end 2008 EBRI/ICI 401(k) results

Average 401(k) Balance Fell 24% in 2008

BankInvestmentConsultant.com - ‎28 minutes ago‎

By Money Management Executive Workers who had already been investing in their 401(k) for at least five years through 2008 saw their balances drop an average ...

Average 401(k) Balance Fell 24% in 2008

Financial-Planning.com - ‎32 minutes ago‎

By Money Management Executive Workers who had already been investing in their 401(k) for at least five years through 2008 saw their balances drop an average ...

Average 401(k) Balance Fell 24% in 2008

On Wall Street - ‎33 minutes ago‎

By Money Management Executive Workers who had already been investing in their 401(k) for at least five years through 2008 saw their balances drop an average ...

Don't be scared away from 401(k) investments

Jackson Clarion Ledger - ‎1 hour ago‎

If you are wondering if it's still worth the worry to invest in a 401(k) or similar workplace retirement plan, stop your hand-wringing. It is. ...

Your retirement plan is still valuable

OCRegister - ‎3 hours ago‎

If you are wondering if it's still worth the worry to invest in a 401(k) or similar workplace retirement plan, stop your hand-wringing. ...

Right time to invest in a 401(k) plan? Absolutely

HeraldNet - Michelle Singletary - ‎5 hours ago‎

If you are wondering if it's still worth the worry to invest in a 401(k) or similar workplace retirement plan, ...

Is investing worth the worry?

Daily Press - ‎6 hours ago‎

WASHINGTON — If you are wondering if it's still worth the worry to invest in a 401(k) or similar workplace retirement plan, stop your hand-wringing. ...

The Forecast Is Sunny if You Weather the 401(k) Storm

Washington Post - Michelle Singletary - ‎12 hours ago‎

If you are wondering whether it's still worth the worry to invest in a 401(k) or similar workplace retirement plan, ...

Market Meltdown Costs 401(k) Participants One-Third of Their Retirement Savings

Workforce Management - ‎16 hours ago‎

The average 401(k) participant lost nearly one-third of his or her retirement account assets in 2008 because of the market downturn, according to a report ...

Long-Term 401(k) Balances Up Despite Recession

Planadviser.com - Rebecca Moore - ‎16 hours ago‎

October 07, 2009 --- After rising for five years, the average 401(k) retirement account fell 24.3% in 2008, according to an analysis of participants in the ...

How Your 401(k) Investments Stack Up

U.S. News & World Report - Emily Brandon - ‎16 hours ago‎

The bulk of 401(k) assets are invested in stocks. At the end of 2008, 56 percent of 401(k) participants' savings was invested in the stock ...

401(k) Assets Fell 30.5% in 2008

Financial Advisor Magazine - ‎17 hours ago‎

A new report has quantified the damage the 2008 bear market inflicted upon Americans' 401(k) savings and, as expected, it was severe. ...

401(k) balances fall sharply in 2008: Study

Business Insurance - Jerry Geisel - ‎19 hours ago‎

Employees' 401(k) plan account balances fell sharply in 2008 as equities markets plunged, but the account balances remain significantly higher than a few ...

401(k) investors: Hit hard in '08, doing better now

CNNMoney.com - Jeanne Sahadi - ‎21 hours ago‎

The financial crisis pounded investors, and a new report details just how badly. But 401(k) participants have since prevailed over the most punishing market ...

Detroit Free Press Susan Tompor Column: 401(K) Savers Took Beating During ...

istockAnalyst.com (press release) - ‎Oct 7, 2009‎

Pretty bad. So bad that most savers probably don't need a study to confirm it. --Many American workers suffered an average 24.3% decline in their 401(k) ...

For Consistent Savers, 401k Balances Shrunk 24 Percent in '08

MutualFundWire.com (subscription) - Adam Kommel - ‎Oct 7, 2009‎

The average 401(k) account balance consistently held since 2003 fell 24.3 percent in 2008, a report authored jointly by the Employee Benefit Research ...

For Consistent Savers, 401k Balances Shrunk 24 Percent in '08

MutualFundWire.com - Adam Kommel - ‎Oct 7, 2009‎

The average 401(k) account balance consistently held since 2003 fell 24.3 percent in 2008, a report authored jointly by the Employee Benefit Research ...

401(k) accounts took a beating in '08

Chicago Sun-Times - Francine Knowles - ‎Oct 7, 2009‎

The Employee Benefit Research Institute's database of 24 million 401(k) plan participants showed the average ...

401(k) savers took beating during meltdown of '08

Detroit Free Press - Susan Tompor - ‎Oct 7, 2009‎

Pretty bad. So bad that most savers probably don't need a study to confirm it. • Many American workers suffered an average 24.3% decline in ...

A Post-Mortem on Your 401(k)s in 2008

Wall Street Journal - Andrea Coombes - ‎Oct 6, 2009‎

Maybe the best that can be said about the effect of last year's market crash on average 401(k) balances is: It could have been worse. ...

401(k) asset gain seen despite market meltdown

Pensions & Investments - Jeff Nash - ‎Oct 6, 2009‎

“Consistent” 401(k) participants — those who have held accounts with the same employer every year from January 2004 through December 2008 ...

New Research from EBRI/ICI: 401(k) Balances Fell in 2008 Bear Market

PR Newswire (press release) - ‎Oct 6, 2009‎

WASHINGTON, Oct. 6 /PRNewswire-USNewswire/ -- American workers who held 401(k) accounts consistently from 2003 through 2008 suffered a 24.3 percent average ...

New Research from EBRI/ICI: 401(k) Balances Fell in 2008 Bear Market

Webnewswire.com - ‎Oct 6, 2009‎

prnewswire-usnewswire/ -- American workers who held 401(k) accounts consistently from 2003 through 2008 suffered a 24.3 percent average drop in their ...

New Research from EBRI/ICI: 401(k) Balances Fell in 2008 Bear Market

SunHerald.com (press release) - ‎Oct 6, 2009‎

Despite Losses, Ongoing Contributions Pay Off in 5-Year Account Growth WASHINGTON, Oct. 6 /PRNewswire-USNewswire/ -- American workers who held 401(k) ...

Retirement Funds Fell Less than Broader Market in 2008, Study Says

Wall Street Journal - Andrea Coombes - ‎Oct 6, 2009‎

Maybe the best that can be said about the effect of last year's market crash on average 401(k) balances is: It could have been worse. ...

New Research from EBRI/ICI: 401(k) Balances Fell in 2008 Bear Market

Earthtimes (press release) - ‎Oct 6, 2009‎

WASHINGTON, Oct. 6 /PRNewswire-USNewswire/ -- American workers who held 401(k) accounts consistently from 2003 through 2008 suffered a 24.3 percent average ...

New Research from EBRI/ICI: 401(k) Balances Fell in 2008 Bear Market

SYS-CON Media (press release) - ‎Oct 6, 2009‎

WASHINGTON, Oct. 6 /PRNewswire-USNewswire/ -- American workers who held 401(k) accounts consistently from 2003 through 2008 suffered a 24.3 percent average ...

Typical US Worker Saw 401(k) Lose 24.3% in 2008

BusinessWeek - Lauren Young - ‎Oct 6, 2009‎

The average 401(k) account balance was $86513 at year-end 2008. (At the end of 2007, the average investor had an account balance of $114337. ...

Average 401(k) loss at 24.3%

Detroit Free Press - Susan Tompor - ‎Oct 6, 2009‎

Pretty bad. So bad that most savers probably don't need a study to confirm it. • Many American workers suffered an average 24.3% decline in ...

In the balance: 401(k) participants lose one-third of their assets

InvestmentNews - Sara Hansard - ‎Oct 6, 2009‎

The average 401(k) participant lost nearly one-third of their retirement account assets last year because of the market downturn, ...

US Workers' 401(k)s Fell 30% Last Year - Report

Wall Street Journal - ‎Oct 6, 2009‎

American workers with 401(k) accounts saw their savings ravaged during 2008's bear market, though people with accounts for at least five years saw smaller ...

401(k) investors: Hit hard in '08, doing better now

CNNMoney.com - Jeanne Sahadi - ‎Oct 6, 2009‎

The financial crisis pounded investors, and a new report details just how badly. But 401(k) participants have since prevailed over the most punishing market ...

But average 401(k) balance among consistent savers fell 24% in 2008

MarketWatch - Andrea Coombes - ‎Oct 5, 2009‎

By Andrea Coombes, marketwatch SAN FRANCISCO (marketwatch) -- Maybe the best that can be said about the effect of last year's market crash on average 401(k) ...

Washington Post: The Forecast Is Sunny if You Weather the 401(k) Storm

http://www.washingtonpost.com/wp-dyn/content/article/2009/10/07/AR2009100703684_pf.html

Weather the 401(k) Storm

Washington Post

A Post-Mortem on Your 401(k)s in 2008 Andrea Coombes. Wall Street Journal (Eastern edition). New York, N.Y.: Oct 7, 2009. p. D.2

How Long Will It Take to Recover Your Investment Losses?

http://www.usnews.com/money/personal-finance/investing/articles/2009/10/01/how-long-will-it-take-to-recover-your-investment-losses.html

How Long Will It Take to Recover Your Investment Losses?
Rebuilding may not take as long as you think

U.S. News and World Report, October 1, 2009

Given Up Hope on Retirement? Newsweek

Given Up Hope on Retirement?
Newsweek

An Evaluation of the Adequacy and Structure of Current U.S. Voluntary Retirement Plans, with Special Emphasis on 401(K) Plans

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1474865

Abstract:
This paper reviews the results of many empirical and simulation studies EBRI has undertaken to determine whether future cohorts of retirees in the US are likely to have retirement income adequacy and the extent to which the voluntary retirement system is contributing to this objective in its current form as well as possible modifications that may increase its efficiency.

The new 'retirement' plan: Just keep working msnbc.com - USA

The new 'retirement' plan: Just keep working msnbc.com - USA

What Does Consistent Participation in 401(k) Plans Generate?

This Issue Brief presents recently available longitudinal data from the EBRI/ICI 401(k) database on consistent participation in a 401(k) plan, through year-end 2007. Looking at consistent participants in the EBRI/ICI 401(k) database over the eight-year period from 1999 to 2007, the average 401(k) account balance increased at an annual growth rate of 9.5 percent over the period, to $137,430 at year-end 2007. The median 401(k) account balance (half above, half below) increased at an annual growth rate of 15.2 percent over the period, to $76,946 at year-end 2007. Data for 2008 are currently being analyzed and are expected to be published later this year.

http://ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=4315

Your 401(k): Getting back what you lost CNNMoney.com - USA

Your 401(k): Getting back what you lost
CNNMoney.com - USA
http://money.cnn.com/2009/07/14/retirement/401k_recovery/

DOL/SEC Target-Date Hearing Webcast Now Online

Excerpt: "The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) has posted on its Web site the archived Webcast of the June 18, 2009, joint target-date fund hearing with the Securities and Exchange Commission (SEC). The hearing received testimony from 36 witnesses on issues relating to target-date funds and other similar investment options. According to EBSA, the Webcast archive is broken down by witness panels to make it easier to view. It can be viewed at http://www.dol.gov/dol/media/webcast/hearing/."

How Would Target-Date Funds Likely Impact Future 401(K) Accumulations?

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1422726

Abstract:
As part of EBRI’s 2008 analysis of the likely impact of the Pension Protection Act’s safe harbor automatic enrollment and automatic escalation provisions, we developed a stochastic simulation model to project future 401(k) balances as a function of various plan design variables as well as assumptions with respect to various employee behavioral responses. In this paper I report on the results I obtained using the EBRI simulation model to determine how target-date funds (TDFs) would likely impact 401(k) participants assumed to be automatically enrolled. I realize that TDF use in 401(k) plans is not limited to those automatically enrolled; however, based on our simulation results, it appears that this 401(k) auto-enrollment will represent the majority of TDF use in the future and hence I will concentrate my analysis on those results. Results are reported both at the time of retirement as well as at the time of job change for those who are assumed to cash out. Several scenarios are presented in terms of alternative rates of return as well as several different types of target date funds.

Target-date Funds Under The Microscope

Target-date Funds Under The Microscope
FOXBusiness - USA

Robert Powell

MarketWatch

BOSTON -- Target-date funds, once considered the be-all, end-all mutual-fund product for investors who don't have the time or inclination to build their own retirement portfolios, are about to be scrutinized by federal regulators. Given the rising popularity of these funds and their dismal performance last year, that's a good thing.

Regulators from the Labor Department's Employee Benefits Securities Administration and the Securities and Exchange Commission will hold a public hearing on June 18 "to examine the need for additional guidance given the importance of these investments to the retirement savings of investors."

The witnesses, who must submit requests to testify by June 5, will address how target-date fund managers determine asset allocation; how they select and monitor underlying investments; the extent to which risks are disclosed to investors and the adequacy of that disclosure; and the approaches or factors to compare and evaluate target-date funds.

In short, EBSA and the SEC want to learn what's working with these funds, what's not and what, if anything, needs to be changed. They want to figure out what new regulations or laws might be needed to protect investors who think they're buying one thing -- safe asset allocation -- but get something entirely different -- volatile funds that declined in value anywhere from 4% to 41% last year.

Target-date funds are mutual funds that invest in a pre-arranged mix of stock, bond, and money-market mutual funds, usually from the same fund family. Target-date fund managers typically use time horizon rather than risk tolerance or investment objective to determine the fund's asset allocation. Typically, the longer the target date, the more the manager invests in stock funds. As the fund gets closer to its target date, managers adjust downward -- based on a pre-arranged "glide path" -- the percent invested in stock funds.

But what do the experts who will likely testify at the upcoming hearing have to say about target-date funds? Some say it's too soon to say anything conclusive about these products. Others say the funds' overall performance proves a one-size-fits-all product simply won't work, and still others say a nip here and a tuck there could make these funds work. Read comments on Labor Department site from those who are requesting time to testify at the hearing.

What's working?

Under the Pension Protection Act of 2006, 401(k) plan sponsors -- that is, employers -- can automatically enroll employees into qualified default investment alternatives or QDIAs, including target-date funds. For those workers who weren't contributing to their 401(k), automatic enrollment and contributions to target-date funds are better than not investing, say some experts.

Ditto for older workers who invest in target-date funds of their own volition. Before target-date funds came along, many plan participants, especially those within 10 years of retirement, typically invested too much of their money in stock, said Jack VanDerhei, research director at the Employee Benefit Research Institute.

In fact, VanDerhei said some studies showed older plan participants investing anywhere from 70% to 90% of their money in equities. By contrast, the average 2020 target-date fund today might have about 50% invested in stocks, a much more prudent allocation for someone on the cusp of retirement, he said.

"Target-date funds seem to do a good job of taking plan participants away from extreme equity positions, of having either too little or too much invested in stocks," he said.

Others agree. "Target date funds improve the performance grade of most investors from an 'F' to a 'C,'" said Aaron Skloff, a chartered financial analyst and chief executive of Skloff Financial Group.

Still, he and others said much is not working when it comes to these funds.

Perception is not reality

One big problem with target-date funds: You typically buy a fund whose target date most closely matches your projected year of retirement. If you plan to retire in 10 years, you would buy a fund with 2020 in its name. But even though these funds might have the same date in their name, few fund managers take the same approach when it comes to asset allocation and glide path. One fund might have 20% in stocks while another with the same target date might have 40%.

That problem came home to roost last year. Folks on the cusp of retirement who purchased 2010 funds apparently assumed that such funds would have little or no assets invested in stocks, but they got a rude awakening: The average 2010 fund fell 23% in 2008, according to Ibbotson Associates, and things haven't been much better this year, with the average 2010 fund losing 4.7% in the first quarter.

"The market's recent upheaval is a potent reminder that target-date funds for retirees or near-retirees are neither risk-free nor a guaranteed source of income, no matter how conservatively they may be positioned," Morningstar analyst Michael Herbst wrote in a recent report.

Others say that many target-date funds, not solely those dated 2010, are investing far too much in stocks because underlying investment theories are flawed.

"The 2008 failure is primarily attributable to the flawed investment theories much more so than failure of asset allocation," Louis Harvey of Dalbar wrote in a report that he plans to submit to EBSA.

Mediocre funds

Another problem, Skloff said, is that "many mutual fund companies load their target-date funds with mediocre offerings," he said. "Something they might not like you to know is [their] lack of need to place their best-performing mutual funds inside of a target-date fund, as the best-performing funds are already attracting plenty of assets. The mediocre funds need to attract assets to make them more profitable."

The list of things that are wrong with target-date funds is much, much longer.

But experts also say there are ways to change things for the better.

More education required

VanDerhei suggests that much more education is needed for plan participants who invest in target-date funds. According to VanDerhei, plan participants seem to getting much of their information from co-workers rather than fund managers.

Customized funds

Ideally, Skloff said, plan sponsors should be customizing target-date funds so that plan participants can use the best-of-breed funds from many different fund families. "This would avoid the conflict of interest the mutual-fund company would have in loading its TDF with mediocre, proprietary selections," he said.

Managed accounts

Jason C. Roberts, a partner with Reish Luftman Reicher & Cohen, said one-size-fits-all funds serve no one well. "We have come a long way to come back to what we knew at the start," he said. "Investment decisions require a great deal of unique input."

Roberts is calling for the increased use of what he calls independent "asset allocators," advisers who can custom-build 401(k) and IRA portfolios to the unique needs of each person.

On June 18, watch a live Webcast of the hearing at this site.

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