Tuesday, May 13, 2008

Older Workers Hold More Employer Securities in 401(k) Plans

According to a report issued by Financial Engines assessing how well Americans are handling their 401(k) plans, older plan participants are more likely to have high company stock concentrations. In particular, the report--The Financial Engines National 401(k) Evaluation--found that 43% of those over age 60 hold more than 20% of their 401(k) portfolios in company stock, compared to only 28% percent of those under age 30.

The report found similar trends with regard to higher concentrations of employer securities. For example, 25% of those over age 60 hold portfolios with 50% or more invested in company stock, compared to just 13% of those under age 30, and 15% of participants over age 60 hold 80% or more of their portfolios in company stock.

As Jeff Maggioncalda, president and CEO of Financial Engines, explained:
Unfortunately, the older employees holding the highest amounts of company stock have the least amount of time to recover if their company’s stock happens to take a hit. Many participants don’t realize that holding large amounts of company stock is actually a drag on the long-term growth of their portfolios.
Source: Financial Engines Press Release (May 12, 2008)

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