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Good and bad news for 401(k)s

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Bad news for 401(k)s, but not as bad as it could be. A recent study by the Employee Benefit Research Institute found that average account balances fell 24 percent in 2008, but rose 7 percent annually over the five-year period the study tracked, the Wall Street Journal reports.

Well-diversified portfolios may account for the relative success. According to Jack VanDerhei, director of research at EBRI, which carried out the study, diversification may have helped investors avoid the worst of the stock market fall. Equity funds were heavily favored; the average allocation for workers in their 50s was 35.2 percent. However, guaranteed investment contracts and bond funds were popular with older workers, at 16.2 percent and 12.7 percent, respectively.

Boomers fared slightly better than their counterparts. Of workers with over $100,000 in their 401(k) accounts, 45 percent were in their 50s. Of those with less than $10,000, only 17 percent were in their 50s.


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