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Portfolio > Mutual Funds > Equity Funds

401(k) Account Balances Surged In 2003

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NU Online News Service, August 9, 2004, 1:35 p.m. EST

The average long-term 401(k) account grew by 29% in 2003, according to a new report.[@@]

The mean account balance for individuals who have maintained accounts at least since 1999 was $76,809 at the end of 2003, up from $59,510 the year before, says the report by the Employee Benefit Research Institute and the Investment Company Institute in Washington.

“As anticipated, a rising equities market is reflected in growing retirement account balances,” said EBRI president and chief executive officer Dallas Salisbury.

But much of the increase was due to both new contributions as well as changes in the value of assets already in the accounts.

The 2003 balance was up 17% from the 1999 figure of $65,572?or an annual increase of about 4%.

Younger workers fared much better than older ones, primarily because they contributed more to their accounts than did older workers, the report says.

The average balance for a worker in his 20s jumped 139% between the end of 1999 and 2003, overcoming losses from a stock market slump in that time. For workers in their 60s with 30 years’ tenure, account value fell by almost 16% in the period because of a combination of the market’s poor performance and plan withdrawals.

Despite market instability during this period, about two-thirds of 401(k) account assets were invested in stocks at year-end 2003, according to the report. About 45% of participants’ assets were in equity funds, 16% in company stock, 9% in balanced funds, 10% in bond funds, 13% in guaranteed investment contracts and other stable value funds and 5% in money funds.

Other findings from the 2003 EBRI/ICI 401(k) study:

  • Participants’ allocations to company stock remained in line with previous years.
  • About 18% of eligible participants had loans outstanding at year-end 2003, and the average size of the loan was about 13% of the account balance (net of the unpaid loan balance), a figure that is similar to what EBRI and ICI found in previous years.


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