Lots of retirement planning went awry in 2007 and 2008 when the nation's financial system went haywire. But investment giant Vanguard reported today in their annual analysis of defined contribution plans, "How America Saves 2010," that among the 3.2 million 401(k) retirement plans it manages, 66 percent of savers participating since 2007 had higher account balances at the end of 2009 than they did before the stock market hit its peak in October 2007.
Overall, Vanguard says retirement account values rose 10 percent between September 2007 and December 2009, even among participants who had losses of more than 30 percent in 2007 and 2008. Some of that represents a rise in values -- asset values among Vanguard-managed defined contribution plans like 401(k)s rose 23 percent from 2008 to 2009. And some of it reflects additional contributions from both employees and employers.
How savers chose to invest their money varied greatly. An increasing number were gun-shy about managing their money themselves, with about 25 percent of all participants in Vanguard-managed defined contribution plans in 2009 choosing to put all their money into a single automatic investment plan such as target-date funds, other balanced funds and managed account advisory services -- up from 7 percent in 2005.
Others continued to go their own way -- right or wrong -- with 14 percent of participants investing only in stocks and 15 percent putting 80 percent or more in bonds.
The share of participants who held more than 20 percent of their savings in their company's stock fell to 30 percent in 2009, from 45 percent in 2005.
The economic turmoil discouraged some people from saving at all in their 401(k)s, with the participation rate in Vanguard-managed retirement plans declining from 77 percent in 2008 to 75 percent in 2009.
Vanguard participants on average saved 9.4 percent of their incomes, including what their employers kicked in. That's a far cry from the 15 percent to 20 percent that retirement planners recommend. But considering the employment turmoil in the last three years, it seems like a pretty good showing to me.