Business

Retirement funds sinking along with stocks

Wall Street is in bad shape, but Main Street is even worse off.

About $450 billion has been sucked out of the Americans’ 401(k) plans in the first six weeks of the year — with the typical retirement fund suffering deeper losses than the Dow.

That means the average 45-year-old worker’s 401(k) will be $16,351.99 lighter by retirement age, according to data from Fidelity and the Investment Company Institute.

More than 53 million US workers have a 401(k) plan, which, for many, is a foundation of retirement planning. The plans — which make up about 18 percent of all retirement assets — let people put away money each week, sometimes with a contribution from an employer, and defer taxes until after retirement.

At the end of last year, the average US worker had $87,900 in his or her 401(k), down from an all-time high of $91,800 at the end of March, according Fidelity.

With this year’s market rout, the path to retirement just got longer. The 20 most popular funds for 401(k) assets, as listed by plan analyst Brightscope last year, have had an average slide of 10.3 percent this year. By contrast, the Dow Jones industrial average has lost 8.45 percent this year.

Those plans, which totaled $1.35 trillion in assets at the end of January, include the Vanguard Institutional Index Fund (down 10.3 percent), the PIMCO Total Return Fund (down 0.1 percent) and the Fidelity Growth Company Fund (down 17.57 percent).

Only one has made money this year: the Vanguard Total Bond Market Index Fund, which is up 2.07 percent.

While it might be painful to check your account now, it hurt even more after the financial crisis in 2008. The account average hit a low of $46,200 at the end of March 2009, according to Fidelity.

So just because you’ve taken some hits recently, doesn’t mean you should give up on your 401(k).

“Their account balance did go down [during the crisis], but they did go back up again,” said Sarah Holden, ICI’s senior director for retirement and investor research. “The key is really keeping at it.”