SAN FRANCISCO (MarketWatch) -- Despite the recession, more workers ramped up retirement-plan contributions in the second quarter than reduced them, reversing a trend in the previous three quarters of more workers' cutting contribution rates, according to a Fidelity Investments study of plans it administers for 11.2 million participants.
While the vast majority of workers kept their contributions steady in the second quarter, about 5% increased their deferral rate and just 3% decreased their rate. Earlier in the economic downturn, the portion of participants cutting their contributions topped 6%, according to Fidelity.The average account balance rose to $53,900 in the second quarter, a 13.5% increase from the first quarter, primarily driven by the stock-market rally and employer contributions, said Scott David, president of Workplace Investing with Fidelity Investments.
Workers who maintained a long-term view and "stayed the course during the market turmoil of 2008" are being rewarded now as 401(k) balances improve, he said.
Retirement savers who had a balance with Fidelity in the last five years and maintained that balance saw 35% increases. While the capital markets helped, those who didn't liquidate and move to cash are reaping the rewards, David said.
"You're buying more shares when prices are down, fewer shares when prices are up," he said. "Those who didn't take a loan and withdrawal are very far down the road to recovery."