Earnings Outlook Improving For 401(K) Plans
| 07:29:00 |
It seems like there's nothing but not so great news going around these days, but then again a lot of it is down to the press just fear-mongering again because it gets rankings. Anyway, there is something to give a lot of people hope, particularly if they have retirement anxiety. A number of reports revealed that 401(k) policies are beginning to make money again, after years of stagnation.
Retirement anxiety all over
In the past few years, many people who have 401(k) policies were shocked to see them go from being nest eggs to rotten ones as the stock industry tanked. A large number of current and soon-to-be retirees were mortified and cast into uncertainty. According to the Huffington Post, numerous surveys of people in what is called "Generation Y," the people born after Generation X and missed out on wearing flannel, have indicated this demographic are somewhat pessimistic about retirement.
A bunch of 401(k) plans and accounts are starting to make more money now, which is some good news for many people nearing retirement, according to USA Today.
Some accounts up 25 percent
Reports vary, but a variety of studies and releases from several corporations indicate healthy gains during the last few years. Lipper, according to USA Today, reports the typical stock mutual fund has valued 11.4 percent over the year. Since 401(k) plans are essentially a tax-protected mutual fund with some elements of a trust or other maturing asset, many will have gained that much or possibly more.
Since 2009 when the market hit rock bottom, the typical stock mutual fund really increase 124 percent, according to Lipper, which is good news. At the start of the year, the typical 401(k) account had $70,970, according to Aon Hewitt, which increased to $74,380.
According to Time magazine, investment firm Funds Advisor found the median employer-sponsored retirement plan had appreciated by 25 percent in the past three years. Specifically, 401(k) plans appreciated an average 28 percent.
There was an 80 percent increase seen in Mississippi and 1 percent in Arkansas, so it obviously varied a lot by states. Blue states saw 25 percent increases while red states saw 28 percent increases.
Huge gains for contributors
The one thing that is most important is that those who contributed the most cash saw the biggest gains in their 401(k) plans, according to USA Today and Time.
The way the accounts are supposed to work is a kind of "snowball" effect. Roll a snowball down a hill, it gets bigger. Same thing with a 401(k) or Roth or other type of retirement account; the more one contributes and continues to do so, the more it accumulates. Even though it means just a little cash out of pocket per month, it's almost like making a personal unsecured loan to one's self.
Retirement anxiety all over
In the past few years, many people who have 401(k) policies were shocked to see them go from being nest eggs to rotten ones as the stock industry tanked. A large number of current and soon-to-be retirees were mortified and cast into uncertainty. According to the Huffington Post, numerous surveys of people in what is called "Generation Y," the people born after Generation X and missed out on wearing flannel, have indicated this demographic are somewhat pessimistic about retirement.
A bunch of 401(k) plans and accounts are starting to make more money now, which is some good news for many people nearing retirement, according to USA Today.
Some accounts up 25 percent
Reports vary, but a variety of studies and releases from several corporations indicate healthy gains during the last few years. Lipper, according to USA Today, reports the typical stock mutual fund has valued 11.4 percent over the year. Since 401(k) plans are essentially a tax-protected mutual fund with some elements of a trust or other maturing asset, many will have gained that much or possibly more.
Since 2009 when the market hit rock bottom, the typical stock mutual fund really increase 124 percent, according to Lipper, which is good news. At the start of the year, the typical 401(k) account had $70,970, according to Aon Hewitt, which increased to $74,380.
According to Time magazine, investment firm Funds Advisor found the median employer-sponsored retirement plan had appreciated by 25 percent in the past three years. Specifically, 401(k) plans appreciated an average 28 percent.
There was an 80 percent increase seen in Mississippi and 1 percent in Arkansas, so it obviously varied a lot by states. Blue states saw 25 percent increases while red states saw 28 percent increases.
Huge gains for contributors
The one thing that is most important is that those who contributed the most cash saw the biggest gains in their 401(k) plans, according to USA Today and Time.
The way the accounts are supposed to work is a kind of "snowball" effect. Roll a snowball down a hill, it gets bigger. Same thing with a 401(k) or Roth or other type of retirement account; the more one contributes and continues to do so, the more it accumulates. Even though it means just a little cash out of pocket per month, it's almost like making a personal unsecured loan to one's self.
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