Participants in 401(k) plans saw their account balances grow by more than 29% last year, evidence that despite a difficult bear market in previous years, investors are still turning to the vehicle as an effective way to save over the long-term. This is according to a recent study released by the Investment Company Institute and the Employee Benefit Research Institute.
The average balance for all accounts held since at least 1999 jumped 29.1% to $76,809 in 2003, from the $59,510 the previous year. The increase marks a significant turnaround from 2002, when the average account balance dropped 7.9% amid a 22% fall in the broad stock market indices. It also shows that overall balances are up 17% from the $65,572 average posted in 1999, leading to an annual increase of about 4%. The changes are due to a combination of factors in addition to investment performance and include contributions, withdrawals, borrowing and loan repayment.