Among 2.7 million employees eligible for 401(k) investment plans, the median rate of return last year was minus 28.3 percent.
From 2007 to the end of 2008, the average 401(k) balance studied by Hewitt Associates fell from $79,600 to $57,200.
According to a report released Wednesday, 44 percent of employees who invested in 401(k)s lost 30 percent of more of their savings last year.
A fortunate 11 percent were able to break even or record a portfolio gain.
But employees kept the faith, Hewitt said. Average contributions dropped just a smidge — from 7.7 percent in 2007 to 7.4 percent in 2008. In fact, more workers increased their savings rate (15.4 percent of participants) than decreased their contributions (14.9 percent).
Only 5 percent of employee investors stopped contributing to their 401(k) plans last year, the report said.
Hewitt tracked some movement into "less risky investment funds in an attempt to time the market." Stable-value funds saw an 11 percent increase in asset valuation last year.
The report also noted that 18 percent of employees took a hardship withdrawal from their 401(k)s in 2008. And 23.1 percent took out 401(k) loans — about the same level as previous years.
The average allocation to company stock ended the year at 14.9 percent, Hewitt said. That was down 7.4 percent from 2007.
(c) 2009, The Kansas City Star. Source: McClatchy-Tribune Information Services.