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Top Earners Lost Most From 401(k)s, Study Finds

August 5, 2009

The median asset levels in 401(k) plans dropped at least 15 percent from year-end 2007 to mid-June 2009, but the affluent and wealthy saw much heftier losses, according to a new report.

The analysis, by the Washington-based Employee Benefit Research Institute, showed how the downturn in the economy has affected all defined-contribution plans and individual retirement accounts.

The median balance of a defined-contribution plan dropped 16.4 percent to $26,578 during the period, the report showed.

Families with higher income fared worse.

Those with more than $100,000 a year in income lost 22 percent in their defined-contribution plans, and those with a net worth in the top 10 percent saw their balances fall 28 percent.

Meanwhile, IRAs and Keogh plans, which are retirement plans for self-employed individuals, fell 15 percent to $28,955.

Americans have a great deal of work to do after the tremendous loss of wealth in 2008 to ensure financial security in retirement,” Craig Copeland, EBRI’s senior research associate and the author of the report, said in a statement. “However, some optimism is warranted, as most individuals continue to contribute to their individual account plans and are in a position to accumulate added wealth as the economy recovers.”

The EBRI analysis adjusted account balances of defined-contribution plans and IRAs based on the asset allocation reported within the plans by using equity and bond market returns from January 1, 2008, to June 19, 2009.


Filed by Lisa Shidler of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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