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Principal Survey Reports Growth in Retirement Plan Account Values

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Account values for employer-sponsored retirement plans increased by 4.9% between 2007 and 2010, according to a new report.

Principal Financial Group Inc., Des Moines, published this finding in a new report, “The Total View 2011,” which explores trends in retirement plan solution plan designs. The survey covers defined contribution (including 401(k) and 403(b)) defined benefit, employee stock ownership and non-qualified plans.

The report finds that average rate of returns improved over the survey period, bouncing back from -23.9% in 2009 to 16.5% in 2009 and then again 2010 to 10.9%.

However, only 36% of employees they are confident, very confident or extremely confident in their ability to achieve their financial goals.

Nearly double the number of participants increased their contributions (19.1%) rather than stopped or decreased (9.7%), the report says.

Among the survey’s other findings:

—The number of participants using lifecycle investment options increased by 11.8% from 2008 to 2010.

—Only 19% of those nearing retirement have created a plan for transitioning savings into a steady stream of income for life.

—Fifty-six percent of pre-retirees estimate they could spend 6% or more each year without depleting their savings. And more than a third of respondents believe an 8% or higher rate is sustainable—twice the 4% level that most financial experts suggest.

—Nearly 60% are unfamiliar with the concept of retirement income planning.


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