Analyzing the savings patterns of 11.5 million participants in the 16,723 defined contribution plans it serves, Fidelity found that Americans are holding steady when it comes to balancing their concerns over the economy and the declining market, and saving for their retirement.

 

On average, Americans set $3,187 aside from their pre-tax earnings in the first half of the year, up 1.4% from $3,142 in the first half of 2007. Separating out those who were contributing to their 401(k) or other type of DC plan during the first six months of 2007 or earlier, the average savings amount rose 7%, from $3,283 to $3,512.

 

These savings patterns are especially significant, given the market volatility and the 7.5% average decrease in account balances, from $69,200 in the first six months of 2007, to $64,000 at the end of June 2008. Investors obviously were well diversified, since the S&P 500 declined nearly 15% in the first half of this year.

 

For those investors who were putting money in their 401(k) or other DC plan in both years, the decline was not as steep, with those average balances declining less than 1% to $71,500, from $72,000.

 

Fidelity also reported good news on the 401(k) loan front, with the number of Americans with an outstanding loan against their 401(k), 91.2% as of the end of June 2008, down slightly from 19.4% as of the end of June 2007 and 19.9% in the year-earlier period.

 

The number of Americans who initiated a loan against their 401(k) in the first half of this year also declined, to 2.8%, compared with 3.1% at the end of June 2007.

 

The same held true for hardship withdrawals, which essentially held steady, with 0.60% of Americans invested in 401(k)s withdrawing money for these purposes in the second quarter, up narrowly from 0.56% in the second quarter of 2007.

 

“There is no doubt that American workers are feeling the pressure from escalating energy and food prices as well as a slumping real estate market, but the majority are making retirement a priority and staying the course,” said Scott B. David, Fidelity’s president of retirement services.

 

“What we’re seeing in the first half of this year is similar to what we saw during the last period of market volatility that began in 2001. During that turbulent market period, workers also continued to fund their workplace accounts,” David said, “recognizing the importance of saving for retirement even during a down market.”

 

However, the number of people contributing the maximum allowed each year, $15,500, is still very low, averaging 9% across-the-board, 3.8% among those earning less than $100,000 and 38% among employees earning $100,000 or more.

 

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