If you had money in the stock market over the past decade, you probably agree that it was one bumpy experience.
It might lead you to think your retirement account didn't fare too well.
A new study by Fidelity Investments shows consistent contributions and staying in the market paid off for many, but the gain was due more to a commitment to saving than stellar market performance.
Boston-based Fidelity looked at the 401(k) account performance for some 766,000 workers who continued to contribute to their accounts and remained invested from the end of 1999 through the end of 2009.
Their retirement account balances increased an average of 150 percent during the decade, climbing from $65,800 to $163,900.
However, 75 percent of that growth was attributed the account holder adding new money and matching employer contributions.
The remaining 25 percent came from market performance, said Michael Doshier, vice president of workplace investing for Fidelity.
The S&P 500 dropped 24 percent over the same time period. Comparisons between the 401(k) accounts and the S&P 500 index are imperfect, however, because the investments in 401(k) accounts are more widely diversified among stocks, bonds and cash investments.
Still, the results show that even when the markets are volatile, a 401(k) helps workers stick with a plan of saving for retirement and building a nest egg even when market returns are anemic.
"A lot of people might have wavered, and some did, but those that didn't and let the paycheck continue to plug away, really helped their return," Doshier said.
After the most recent market collapse, critics of the 401(k) called for major changes in the system.
They charged it leaves workers too vulnerable to market losses, which in many cases wiped away a third of the account balances.
However, those who kept adding new money to their accounts and stayed invested in stocks saw the benefits of the market rebound since the March low point. Fidelity said among 11 million accounts it reviewed, the average 401(k) balance was up 28 percent in 2009, with the average balance at $64,200.
The median investment gain for the accounts was 27 percent, a figure which excludes new contributions, withdrawals, loans and other 401(k) account activity. By comparison, the S&P 500 rose 23 percent in 2009.
The 401(k) may not be perfect but it at least has proven to help some people stick with saving even when the economy gets tough, Doshier said.
"I don't think anyone would argue the current system is perfect," he said. "But consistent savings behavior toward the long-term goal of retirement in the most methodical way possible is better than the alternative."
The decade review also shows workers may be learning about the risk of having too much invested in stocks.
In 2000 about 80 percent of the workers in the study placed their new contributions into stocks. But by the end of 2009, less than 70 percent did so.
Those contributing 100 percent in stocks dropped to 19 percent in 2009 from 47 percent in 2000.
Contributions to blended stock/bond funds including target-date funds and other balanced funds nearly tripled to 26 percent by 2009.
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