Most Americans Haven’t Recovered Portfolio Losses

While Americans haven’t quite recovered the losses their portfolios suffered amid the market downturn, they are more optimistic than last year, according to a survey commissioned by Edward Jones.

Despite double-digit increases in the stock market, two-thirds (67%) of Americans reported they haven’t recovered losses suffered from market lows a year ago, according to Edward Jones. A recent survey by Hewitt Associates also found that most 401(k) balances have not yet returned to pre-recession levels (see “401(k) Balances Not Quite Back to Pre-Recession Levels”).

Yet Americans are hopeful about recovering their losses in the near future. The number of surveyed Americans who think it will take six years or more to recover investment losses is down to 15% from 24% a year ago. Furthermore, more of the respondents are saving for retirement today than a year ago (78% versus 69%). Respondents aged 55 to 64 showed the greatest overall increase, with 83% currently saving for retirement versus 69% in 2009.

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Only 12% of Americans said the value of their portfolios has already recovered, but that beat some expectations; in the same survey administered last year, only 4% expected savings to be fully restored by 2010. More affluent respondents fared even better: Of the respondents who make more than $100,000 a year, 16% said their portfolios have recovered, versus only 2% from the 2009 survey who thought it would be possible in one year.

The survey saw some differences among ethnic and geographical lines. While whites and blacks were equal in their estimations that it will take two to three years for their retirement savings to recover (18%), only 4% of Hispanics agreed.

Those who live in big cities and the South have also seen better results. Respondents in the South experienced the quickest recovery in their retirement savings (13%) compared to last year’s survey, which showed only 2% thought it would be possible in one year’s time. Americans who reside in metro regions across the U.S. have experienced quicker savings recovery than those who live in non-metro areas (13% versus 8% respectively), according to the survey.

The telephone survey of 1,013 U.S. adults was conducted April 8 to 11 by Opinion Research Corporation.

DoL Plans to Amend Target-Date QDIA Rules

The U.S. Department of Labor (DoL) has announced plans to change a 2007 mandate requiring that employers give participants more target-date fund information.

In its latest summary of upcoming rulemaking activities, the DoL said it expects to have the new rule governing target-date disclosure for qualified default investment alternatives (QDIA) in August. Under the 2007 regulation, target-date retirement funds were one of several default investment funds to which employers can direct contributions made on behalf of employees enrolled automatically or who failed to specific investment selections (see “Reaction to Final QDIA Regs by Industry Professionals is Positive”).   

“This amendment will provide more specificity to fiduciaries as to the investment information that must be disclosed in the required notice to participants and beneficiaries,” the DoL said in the. “This amendment also will enhance the information that must be disclosed concerning targetdate, or similar age based, qualified default investment alternatives.”

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The Labor Department also said it will publish guidance this spring to assist employers in evaluating and selecting target-date funds.

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