The idea of a 401k Plan is to save for retirement. That means investing in it and not withdrawing from it. But since the recession, it’s a lot harder to follow this basic tenet. Here are five ways 401k Plans have been effected.
From 2007 to 2010, account balances have lowered about $5,000.00 to $70,000.00 for Heads of Households aged 45-54. Younger people (35-44) have about $35,000.00 in their plans, down from $44,000.00.
In 2010, employees could contribute $16,000.00 into their 401k Plans. Only 6.7% maxed out their contributions. Only 1% of those who earned between $40,000.00 and $60,000.00 maxed out.
Although more employers offer automatic enrollment in their 401k Plans, the number of employees who opted out rose 1% to 21%.
These numbers come from a Center for Retirement Research at Boston College analysis of the Federal Reserve Board’s Survey of Consumer Finances data. According to that report, “The 2010 Survey of Consumer Finances suggests that whereas the 401(k) system was starting to function better, progress has slowed and even reversed in the wake of the financial crisis and ensuing recession.”