Where our country’s economic woes hit many of us the hardest is watching our retirement funds dwindle before our eyes. This story sums up how bad it has gotten, but also offers hope for how your 401(k)s or the equivalent can recover:
In a study released yesterday, Fidelity Investments reported that the average 401(k) balance dropped 27 percent, to $50,200, last year from $69,200 in 2007. Fidelity has more than 11 million plan participants.
Vanguard, which has 3.5 million participants, reported the average account balance for 2008 fell 28.5 percent to $56,050 from $78,411 in 2007. T. Rowe Price’s 1.7 million participants also had a 27 percent loss on average. . . .
A $100,000 account that has declined by roughly a quarter can return to its original level in two years, if a worker contributes as much as he or she can to the 401(k) while the employer matches half of that amount and the market gains 8 percent each year, said Steve Utkus, director of Vanguard’s Center for Retirement Research.
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