August 20, 2008 at 10:00 am by Timothy Hubbard
As exchange traded funds (ETFs) expand into the retirement and 401(k) market, promising signs exist despite extreme market volatility.According to the staff at mmexecutive, American investors have held steady when contributing to their 401(k) plans in the midst of a declining market. These investors have set aside 1.4% more of their pre-tax earnings for retirement this year, as opposed to the amount set aside in 2007 at this point in the year.
These savings patterns are particularly noteworthy given market volatility and the 7.5% average decrease in account balances. Investors here showed solid diversification as the S&P 500 is down nearly 15% over the first half of this year.
They also reported that the number of Americans with outstanding loans against their 401(k) is down through the first half of the year compared to last year at this time, according to a Fidelity survey. Also, the number of Americans who initiated a loan against their 401(k) has declined in the first half of 2008. This was nearly the same with hardship withdrawals as there was only a .04% increase in Americans withdrawing money from their 401(k) plans.
On top of these positive investing trends, 401(k) sponsors are pushing for fee disclosure, according to Mariana Lemann for Ignites. One-fourth of employers surveyed are not fully confident that the fees and expenses associated with their 401(k) plans have been disclosed properly.
As we reported earlier, rules making fee disclosure mandatory and easily understood could be passed by its Jan. 1 deadline.
As ETFs look to grow in the 401(k) marketplace, possible regulation and positive investment trends make the retirement market look promising.
Tags: 401(k), Retirement
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