Even with stock-market indexes plummeting 22% since 1999, 401(k) holdings dropped just 8% over the same period of time, according to a joint study conducted by the Employee Benefit Research Institute and Investment Company Institute.

Thanks to steady contributions by many 401(k) holders, the stock market decrease did not affect as much of their money as it could have. In fact, the average individual in their 20s with less than two years on the job in 1999 saw 401(k) balances more than double. Older 401(k) participants saw their balances drop, however, as holders in their 50s experienced a 14.8% decrease. Statistics show that older participants tend to contribute less to their plans, while younger holders are usually more aggressive.

A decline in stock exposure may have also contributed to 401(k) balances holding steady. Pure stock fund holdings in 401(k) accounts, which peaked at 53% in 1999, fell to 40% in 2002. However, combining exposure to stocks and stock funds, 62% of 401(k) assets in 2002 were still devoted to these instruments, an 8% decrease since 2001.

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