According to the 401k Performance Survey, an independent study by American Investment Planners LLC, approximately 6% of 401k plans, or an estimated 31,000 plans, were terminated in 2009, the first year the dramatic decline began. The stock market crash of 2008 and the recession were likely factors.
Brett Goldstein, Director of Retirement Planning at American Investment Planners, LLC based in Jericho, New York, said, "Clearly as businesses looked for ways to lower expenses and improve bottom lines, it was not surprising that 401ks were eliminated. I have been studying this trend for the past four years and don't see the trend abating any time soon."
The American Investment Planners 401k Performance Survey also showed that of the 401ks terminated, an estimated 21,000 were eliminated by companies with 100 employees or less. The reason that this is so devastating is that more people are employed by small businesses.
"Despite an improvement in the economy and the stock market, an additional 15,000 401k plans, or 3%, were terminated in 2010" says Brett Goldstein. "To make matters worse, the number of traditional defined benefit pension plans decreased by 15% in 2011. With companies going out of business due to the recession and the continued rise of health insurance premiums, companies have terminated their 401k and other retirement plans.
Without company-sponsored retirement plans like 401ks and defined benefit plans to help employees save for retirement, they will need to set aside their own money for retirement as well as develop their own investment strategies. Goldstein is recommending to clients that they work with a trusted financial advisor who can help set up alternative plans like IRAs, Roth IRAs and annuities.
One other surprising finding from the survey was that employees' 401ks significantly underperformed the market for the last 3 years in a row. "In my experience working with 401ks, most employees are unaware of their performance or realized that they may have lost money.
About Brett Goldstein
Brett Goldstein is Director of Retirement Planning at American Investment PlannersPlanners, LLC based in Jericho, New York. He is an author, speaker and media personality who specializes in providing businesses and individuals with affordable retirement planning solutions. Goldstein's timely advice and tips have been featured on Fox Business Network, Kiplinger's, Forbes, Wall Street Journal Radio, MarketWatch.com, New York Daily News, The Chicago Tribune, and many others.
Brett Goldstein is available for interview: In the Greater New York City area; nationwide by arrangement.
Phone: 516-346-2999 or cell 516-314-3289