So what's up in the world of 401(k)s? The wheels of business have been spinning, and the results are in.
Fidelity Investments has just released a study on the state of the industry and according to the Boston Behemoth, the defined contribution empire continues its substantial growth.
The 104-page page report is entitled "
Building Futures: How American Companies are Helping Their Employees Retire", and represents Fidelity's first attempt at this comprehensive a report. It's based on the answers of 5,401 companies (with approximately 5.2 million participants) with plans managed by
FIRSCo.
In case you already have your leisure reading, in summary the study says ... three-quarters of eligible workers contribute to a defined contribution plan, participants are saving an average of 7% of their gross income for retirement adding up to an average account balance of $60,000 and the average investment options available in plans is up to 9 from 7 in 1995.
"The first thing that we found after looking at participants and sponsors is that the DC system is healthy and meeting its goals, said
Kathryn Hopkins, executive vice president at Fidelity and leader of the study. "People are saving, contributing and doing it at younger ages."
Much of the success story comes from the companies' end, Hopkins said. Companies have made plans more attractive by increasing the number of investment choices, allowing access to loan or withdrawal, creating match systems and offering education.
"There has been an concern that if a participant had more access to their account it would increase trading on the account including jumping in and out of funds but our analysis shows that most people have a buy and hold strategy. On some of the most volatile days we didn't see more action," Hopkins said.
One of the biggest surprises in the study is that a match was a welcomed incentive to invest no matter what size the match. If a company had no match there was about a 50% participation rate but the number went to 60% regardless if it was a 1% or 6% match.
Although 75% of employees are participating in their 401(k) plans, that still leaves 25% not participating and that group remains a prime target, Hopkins said.
"We have to get those people. They're mainly concerned that they can't afford it and we have to tell them that they can't afford not to participate," she added.
In the future Hopkins said pre-retirees and retirees alike have to be educated. "We have spent time getting people to accumulate money, now we need to tell people how to take money."
The problem is that people still don't know all the tax rules and which sources should be tapped first. The next step the industry needs to take, according to Hopkins, is getting Washington to make investing easier to understand. 
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