Balances Down, but Savings Up in 401(k) Plans

Despite the ailing economy, 401(k) investors are saving more, according to a new study from Fidelity, which analyzed the 11.5 million participants it administers. In the first half of the year, investors who participated in the same plan both this year and last set $3,512 aside, on average, from their pretax earnings, up 7 percent from $3,283 in the first half of 2007.

Fidelity says the average retirement plan account balance dropped 7.5 percent in the first half of 2008, to $64,000, down from $69,200 in the first half of 2007. By comparison, Standard & Poor's 500 stock index dropped nearly 15 percent in the first half of this year. Surprisingly, the average balance for employees who stayed in their plans for both years fell less than 1 percent in the first half of 2008. Translation: 401(k) investors are diversifying!

Not surprisingly, Fidelity also found that few of us are contributing the annual maximum of $15,500 to our 401(k)'s: Just 3.8 percent of employees earning less than $100,000 contributed the max, although 28 percent of those making $100,000 or more did.