Boomers Easing Back into their 401(k)s

Many companies that have slashed 401(k) benefits plan to reverse those cuts within the next six months.

Fidelity Investments, considered the nation's biggest 401(k) provider, says that while employees are saving less of their pay than they were a year ago, more of them increased, than decreased, their savings rates in their 401(k) accounts in the second quarter ending June 30.  That reverses the trend of the prior three quarters when more workers cut back savings than increased them.

In addition, Watson Wyatt, a benefits and human resources consulting firm, plans to release a study saying 24% of companies that have cut their 401(k) matches expect to reverse those changes within the next six months.

Another 43% of companies that have cut 401(k) matches expect to restore the matches in the next 12 months, while 16% will restore the benefits over the next 18 months, according to Watson Wyatt's poll of 175 large companies in early August.

Fidelity says it sees signs that employees are starting to save again, possibly because of the market rally that has boosted accounts, or because of increased confidence in the economy.  Fidelity's data, based on more than 17,500 corporate 401(k) plans and more than 11.2 million participants, found that nearly 5% of employees increased their deferral rate in the second quarter, while only 3% of workers decreased their rate.

Source: The Wall Street Journal, August 13, 2009

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