Despite stock slide, few people shifted 401(k) assets in 2008
Relatively few people changed the allocation of assets in their 401(k) retirement savings plans last year, despite the stock market crash that began in September, new data show.
Retirement plan administrator Mercer, which oversees 401(k) accounts for 1.2 million Americans, said just 14% of plan participants made any kind of exchange of assets within their accounts last year.
Those who did ran for safety, shifting money from stock funds to money market funds and so-called stable value accounts, Mercer said.
Mercer’s data jibe with what many financial planners and other advisors have reported: The market crash happened so quickly in the fourth quarter that many investors had no time to react -- or were simply frozen with fear.
Two other trends Mercer saw among its plan participants: a jump in the number of people requesting outright withdrawals from their accounts, particularly in November and December; and a “steady increase” in the number of people who stopped contributing to their plans altogether.
“Overall, Mercer has seen more participants decrease rather than increase their contribution rates throughout 2008, a trend rarely seen in more stable economic times,” the firm said.
Although the number of people withdrawing funds or reducing contributions to zero was relatively small, averaging less than 1% in each case, Mercer called the trends troubling.
--
