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American investors are becoming increasingly cautious after having seen their retirement savings struggle for months.
This week, Hewitt Associates released an analysis of 2.7 million workers and their 401(k) plans. The company found that the average retirement balance had fallen 14 percent in the past year from $79,000 to $68,000.
Employees lost nearly 18 percent of their average balances just in the last two months, and the report noted that some had lost over 30 percent. Despite the difficult climate however, only four percent of workers had actually terminated their 401(k) plans.
Not all of the shrinking balances are due to poorly performing stocks - in fact, many workers have responded to the market conditions by moving funds into safer, more conservative investments. As a result, only 53.8 percent of retirement assets are now held in equities, down from last year's 68.1 percent mark. The company also noted that hardship withdrawals have increased 16 percent over the past year.
"It's encouraging to see that most employees are sticking to their long-term investment strategy and not making rash decisions that ultimately could derail their retirement goals," said Pamela Hess of Hewitt Associates, adding that there is still some evidence out there of "knee jerk investment decisions" tied to market fluctuations.
Investors more cautious in retirement savings
American investors are becoming increasingly cautious after having seen their retirement savings struggle for months. This week, Hewitt Associates released an analysis of 2.7 million workers and their 401(k) plans. The company found that the average retirement balance had fallen 14 percent in the past year from $79,000 to $68,000.
Employees lost nearly 18 percent of their average balances just in the last two months, and the report noted that some had lost over 30 percent. Despite the difficult climate however, only four percent of workers had actually terminated their 401(k) plans.
Not all of the shrinking balances are due to poorly performing stocks - in fact, many workers have responded to the market conditions by moving funds into safer, more conservative investments. As a result, only 53.8 percent of retirement assets are now held in equities, down from last year's 68.1 percent mark. The company also noted that hardship withdrawals have increased 16 percent over the past year.
"It's encouraging to see that most employees are sticking to their long-term investment strategy and not making rash decisions that ultimately could derail their retirement goals," said Pamela Hess of Hewitt Associates, adding that there is still some evidence out there of "knee jerk investment decisions" tied to market fluctuations.
