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Financial crisis saw retirement savings fall; Contributions down for IRAs, 401(k)s

Fewer workers saved in 401(k) and Individual Retirement Accounts following the financial crisis, but those who did saw their account balances increase.

That's the result of an analysis by the Employee Benefit Research Institute.

Participation in 401(k)s and IRAs among workers ages 21-64 had risen sharply in the 1990s through 2005. But participation in 401(k)s leveled off through 2009 to a steady rate of 33 percent. Participation in IRAs dropped over those same four years from 23 percent to 21 percent.

Only 5.4 percent of workers made a tax-deductible contribution to an IRA in 2009.

The results aren't surprising, said Craig Copeland, the report's author. With a spike in unemployment and a decline in stock and housing values, "individuals lost confidence and saving became more difficult, with some needing to tap into savings to pay for their expenses."

However, he said, existing 401(k) and IRA accounts continued to increase in value over that time period. Unfortunately, most U.S. workers own neither type of plan, the study noted.

"If workers as a whole are going to accumulate significant savings for retirement," the study concludes, "they need to take better advantage of these retirement savings vehicles."

The authors concluded that those who can afford to save are still saving. Those who can't are getting left behind. The Great Recession is making it exceedingly difficult for some people to be able to retire.

In 2009, the average annual contribution to a 401(k)-type plan was $4,500, and to an IRA was $2,801.

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