SOURCE: Spectrem Group

April 02, 2013 13:31 ET

401 (k) Investments Remain More Conservative Than Before 2008 Economic Crisis

CHICAGO, IL--(Marketwired - Apr 2, 2013) - Despite the highflying stock market, the percent of 401 (k) assets in equities remains considerably lower than before the 2008 economic crisis, according to Retirement Market Insights Report 2013 by Spectrem Group. In 2012, 401 (k) plan participants held 36% of their assets in diversified equities and another 13% in company stock. That's a full 10 percentage points less than in 2006, when these investors had 40% of their assets in diversified stocks and another 19% in company stock.

Investors have become less conservative with their retirement funds since 2008, when 401 (k) plan participants held just 29% of their assets in equities and 13% in company stock. Similarly, 401 (k) participants trimmed assets in money market funds to 21% of their total in 2012 versus 32% in 2008. But they still are keeping more funds liquid than in 2006, when just 16% of their assets were invested in money market funds.

"The 2008 economic crisis was a defining moment for most investors, and it continues to affect their investment decisions today," says George H. Walper Jr., President of Spectrem Group. "The impact is especially evident in how they are managing their 401 (k) assets and in their worries about being able to retire."

Nearly half, or 46%, of plan participants who are closest to retirement age, from 55 to 64, say their household is not saving enough to meet their financial goals. In contrast, just 35% of plan participants in that age group fully expect to have sufficient income to live comfortably during retirement.

Other insights from the report include:

  • Both private and public defined contribution plans continue to outperform private and public defined benefit plans.
  • Private sector defined contribution plans, aided by ongoing employee contributions, have surpassed the previous peak in 2007.
  • Total U.S. retirement assets grew to $16.3 trillion by yearend 2012 from $15.1 trillion at the end of 2007.

More information about the Retirement Market Insights Report 2013 is available at Spectrem's Millionaire Corner, including:

Research methodology
Spectrem Group's 2013 Retirement Market Insights report is based on periodic surveys with retirement plan sponsors and participants as well as publicly available data. The report can be purchased from Spectrem Group.

About Spectrem Group
Spectrem Group strategically analyzes its ongoing primary research with investors to assist financial providers and advisors in understanding the Voice of the Investor.

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Millionaire Corner is an independent online resource for investors and about investors. With its Find an Advisor service, investors are able to search for financial and investment advisors to assist in growing their wealth.