NEW YORK (CNN/Money) – July is typically the month your second-quarter 401(k) statement is mailed to you. When you get yours, you may, for the first time in a long while, actually like what you see.
The major stock indexes had a solid run in the first half of the year, and especially in the second quarter. The S&P 500, for example, was up 14.9 percent for the quarter, and 10.8 percent year to date through June 30.
So what has that meant for your 401(k) money?
Well, T. Rowe Price, which runs 401(k) plans for 1.3 million participants, estimates that the average investor in its plans will see an 11 percent return for the second quarter and a 7 percent return for the first half.
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(Other 401(k) plan providers, including Fidelity, Principal and Vanguard, said either they didn't have the data readily available or don't release such numbers publicly.)
The T. Rowe Price returns are based on a typical portfolio in its plans, which has 70 percent of assets in equities and 30 percent in fixed income products, particularly stable value funds and money market accounts. The estimated returns do not count contributions. That is, the money employees contributed to 401(k) accounts during the periods is not counted as a "return" on investment.
In terms of dollars and cents, T. Rowe Price estimates the average 401(k) balance will have grown 11.1 percent to about $40,000 compared with $36,000 at the end of 2002.
Keep in mind, that's the average balance, which can skew high because of a small percentage of participants with very fat nest eggs. "Averages are not representative," said David Wray, president of the Profit Sharing/401(k) Council of America.
The median balance – that which half of all 401(k) participants have less than -- is typically much lower, Wray said.
At the end of 2002, for instance, Wray estimates based on several studies that the median balance among 401(k) participants was about $15,000 and the typical allocation in a portfolio was 62 percent equities, 38 percent fixed income, again with a high concentration in stable value funds.
In estimating 401(k) performance year to date through June 30, he expects the typical 401(k) plan participant – who's 42, earns $44,000 a year, contributes 6 percent of his salary to his 401(k) and has been in the plan for eight years – to see a 7.14 percent return on his portfolio. Wray also expects to see the median participant balance to jump 16 percent to roughly $17,400.
Remember, too, the median represents the balance in the plan to which the typical participant is currently contributing. It does not reflect any other balance the participant may have in old 401(k) plans from former jobs or any IRA rollover holdings.
ManuLife, which runs 401(k) plans that enroll 1 million participants, bears out Wray's estimates. Wray said that in an e-mail to him, ManuLife reported plan participants' median balance by the end of the second quarter grew to $17,375 from $15,035 at the end of 2002.
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