Average 401(k) Balances Hit a Record High in First Quarter
And although the Dow was up only 13.5% year-over-year at the end of the first quarter -- far less than the whopping 42.3% gain it registered from 2009 to 2010 -- nearly one in 10 participants increased their contribution rate during the first quarter, the highest percentage to do so since Fidelity began tracking the statistic in 2006, the financial services firm noted.
In other positive news, the nation's high unemployment rate apparently hasn't forced a significantly greater number of people to dip into their 401(k) plans, according to the Investment Company Institute, which released a report earlier this week. The organization found only 1.7% of 401(k) participants took "hardship" withdrawals last year, up only slightly from the 1.6% seen in 2009.
But the percentage of people who took out loans against their 401(k)s in 2010 did climb, the Institute reports. According to its research, 18.2% of 401(k) plan participants had an outstanding loan balance at the end of last year, up from 16.5% at the close of 2009.
That pattern was also noticed during the market meltdown and recession of a few years past. And while many employers allow participants to do so, most savvy investors know borrowing against a 401 (k) should be a last resort, even in these cash-strapped times.