Fidelity Investments says that during the first half of 2008, American workers are continuing to contribute to their workplace-savings plans despite current market volatility. Plus, the average contribution increased slightly compared with the same period last year: to $3,187 vs. $3,142 in the first half of 2007. Employees who contributed to the same savings plan in both periods actually gave $3,512 to the plans on average in the first half of 2008 compared to $3,283 in the first half of 2007, a jump of 7 percent.
Nonetheless, these figures fall far short of the $7,750 pre-tax maximum that can be targeted for contributions in the first six months of 2008, with $15,500 being the yearly pre-tax limit for those under 50 years of age. As of late 2007, less than 10 percent of all workers contributing to workplace-savings plans reached the annual maximum of $15,500.
Fidelity’s research is based on the analysis of its 16,723 corporate defined-contribution-plan clients, which include 11.5 million participants.
The average account balance is down nearly 9 percent to $64,000 as of June 30, 2008, from $69,200 at the end of June 2007, because of market impacts, Fidelity says. For employees who stayed in their plans for both years, this figure declined less than 1 percent to $71,500; during this same time period, the S&P 500 fell nearly 15 percent.
Loans outstanding have been slowly trending down, according to Fidelity. At the end of June 2008, about 19 percent of workers had a loan outstanding in their savings plans, down a bit from June 2007. And the percentage of workers initiating a loan during the three months ended June 30 was 2.8 percent, down from 3.1 percent a year earlier.
The percentage of workers with a balance in their workplace savings plan taking a “hardship withdrawal” or withdrawing funds from their workplace savings account for an immediate or severe financial need was up slightly to 0.60 percent in the three months ended June 30, 2008, as compared to 0.56 percent in the same period in 2007.
Janet Levaux, MBA/MA, is the managing editor of Research; reach her at email@example.com