Products January 30, 2015

Educational Video Series Discusses Stable Value Funds

An educational video series by the Stable Value Investment Association has been released, advising investors and financial professionals about stable value funds.
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A video series from the Stable Value Investment Association (SVIA) is designed to educate investors and financial professionals about stable value funds. This month, the nonprofit organization began posting informational videos each week featuring its members from major financial institutions discussing a range of topics. The first focuses on defining stable value funds; other topics include the benefits of stable value funds, their performance history, and comparisons to other conservative investment options.

SVIA, whose mission is educating the public about the importance of saving for retirement, will post 24 short videos over the next nine weeks. The organization highlights the contribution stable value funds can make toward a financially secure retirement. The funds are found only in tax-qualified defined contribution (DC) plans, such as 401(k), 403(b), and 457 plans, and invest in short- to intermediate-term bonds, whose investment returns are then protected by investment contracts that help stabilize fund returns and value over time.

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“The New Year is a great time to reevaluate your retirement portfolio, and thanks to the help of our members, we are able to educate investors and financial professionals on an investment option they may know little about,” says Gina Mitchell, president of the SVIA. “Currently, 160,000 defined contribution plans offer stable value funds, making this asset class a core investment in most plans, and it is important to understand its unique characteristics.”

The videos can be seen on the SVIA website or on YouTube.

The Markets January 30, 2015

Average 401(k) Balance Record Set Again

Fidelity's final quarterly retirement snapshot for 2014 shows the average 401(k) balance continues to push record levels.
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The Q4 2014 retirement savings analysis from Fidelity Investments reveals both 401(k) and individual retirement accounts (IRAs) grew strongly during the last three months of the year.

Fidelity finds the year-end average 401(k) balance was $91,300 for plans in its recordkeeping network—a record high for 401(k) accounts. The average 401(k) balance is up 3% from the end of the third quarter and 2% year-over-year. The average IRA balance ended the year slightly higher, at $92,200, for a 4% year-over-year gain.

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The average 401(k) contribution (employer and employee combined) was $9,670, an increase of 4% from the previous year. The average IRA contribution in 2014 was only about half the average 401(k) contribution, at $4,325. This is still an increase of 2% from a year ago, Fidelity notes. 

The average 401(k) savings rate increased to 8.1%, Fidelity says, meaning Q4 2014 ended with the highest average savings rate since year-end 2011. When combined with employer contributions, the average employee savings rate was a respectable 12.2% of salary in 2014, Fidelity says.

For employees in a 401(k) plan consistently for 10 years or more, the average balance was $248,000, up 11% from the same period a year earlier.

Also striking in the 2014 data, Fidelity says, is a significant year-over-year jump in the number of people contacting the firm for help with their retirement savings efforts: Over 2.8 million people reached out to Fidelity for help and financial guidance in 2014, the firm says, an increase of 15% over 2013.

“A variety of economic conditions, such as lower unemployment and record-setting stock market performance, helped make 2014 a very good year for retirement savers,” says Jim MacDonald, president of workplace investing for Fidelity Investments. “However, it’s important to remember to take a long-term approach to retirement savings, and not react to short-term market swings. The typical American worker will see markets go up and down many times during their career, so commitment to a long-term savings and investing strategy will put individuals in the best position to meet their retirement goals.”

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