Survey of 401(k) Earning Results For Employees is Positive

Lorrie RayWe know that during the financial downturn, 401(k) accounts suffered, causing some employees to stop contributions.  The most recent survey from the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) may cause those who held back to think twice in the future.  The results of the survey indicate that the accounts of consistent 401(k) participants grew 6.8 percent annually during a five year period which included the years where the financial crisis was pronounced.

More specifically, the average account balance of workers who participated consistently in a 401(k) plan from 2007 to 2012 increased at the compound average annual growth rate of 6.8 percent, and this was despite a 34.7 percent drop in 2008. All the typical factors gave rise to this including contributions, returns, withdrawals, and loans.

The study really focuses on the fact that consistent participation, even when times are tough, does yield greater rewards than inconsistent participation.  This strategy of investing is something employers with plans may want to share with their employees, so that employees can get the most out of their retirement plans.