Younger Participants Increase Saving Despite Economic Pressure

Data from MassMutual's Retirement Services Division suggests that, although economic pressure continues to affect overall participant balances and savings activity, younger retirement plan participants (under age 30) are saving more.

The average savings rate for a MassMutual plan participant under the age of 30 increased from 3.9% in the fourth quarter of 2008 to 4.6% in the first quarter of 2009, MassMutual said in a press release. Almost 87% of MassMutual participants maintained their savings rate in the first quarter, while 2.4% of participants increased their savings rates.

MassMutual noted that 25% of participants made a change to their asset allocation in the first quarter of 2009, compared to 20% in the fourth quarter of 2008, with assets primarily moving into stable value or lifecycle investment options.

Alison Salka, director of behavioral research, MassMutual Retirement Services Division said traffic to the firm’s educational participant Web site has seen a steady increase.

In the first quarter of 2009, the Standard & Poor’s 500 index declined by 11% vs. the fourth quarter of 2008. By comparison, overall MassMutual participant balances have declined by approximately 3% (except for participants under 30), according to the press release.