How Americans allocate 401(k) funds

Americans now hold $1.7 trillion in their 401(k) retirement plans, which have grown by an average of 17 percent a year over the past decade, says a new study by the Investment Company Institute (ICI) and the Employee Benefit Research Institute.

"What we've seen is a slight upward trend in allocation to equity funds," says Sarah Holden, an economist at the Washington-based ICI. "We've also seen a remarkable stability. They are taking a long-term investment strategy." The report, which examined 10 million 401(k) participants, or 26 percent of all participants, also found:

*53 percent of plan balances are invested in equity funds, 19 percent in company stock, 10 percent in guaranteed investment contracts, 7 percent in balanced funds, 5 percent in bond funds, 4 percent in money funds.

*The average account balance was $55,502 at the end of 1999, 18 percent higher than the average 1998 balance.

*42 percent of participants had balances with current employers of less than $10,000, while 15 percent had balances in excess of $100,000.

*Workers in their 60s with at least 30 years at their current jobs have an average balance of $198,595. Workers in their 40s with more than 20 years of tenure average $96,250.

(c) Copyright 2001. The Christian Science Publishing Society