Some people are determined, contributing to their 401(k)s week after week, year after year, whether the market is a happy place or, as it did Thursday, drops 300 points in one go.
Such persistence, and consistency, don't have to be their own reward, however. In fact, according to a study by the Employee Benefit Research Institute and the Investment Company Institute, workers who kept socking it away in good times and bad — including during the recent financial meltdown — saw their average balances grow at a compound rate of 6.8 percent annually during the five years of the crisis, year-end 2007 to year-end 2012. And that's despite a stomach-churning drop of 34.7 percent in that group's average 401(k) account balance in 2008.
In case that didn't sink in, there's more.
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The study, "What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Account Balances, 2007–2012," also found that at the end of 2012, those consistent contributors' average balances were a whopping 67 percent higher than the average account balance in the entire 401(k) database of EBRI/ICI.
One more thing: consistent contributors' median balance saw a compound average annual growth rate of 11.9 percent over the same period, reaching $49,814 at year-end 2012. That's almost three times as much as the median balance across all participants at 2012's end.
Other findings included the facts that consistent contributors increased their holdings of target-date funds, with more of them having such funds in their accounts at year-end 2012 than at year-end 2007, and that they tended to concentrate their holdings in equity securities. Younger participants had higher concentrations in equity securities than older ones.
The market's Thursday drop sent stock futures lower Friday morning, although they trimmed losses a bit after a disappointing jobs report indicated that interest rates were unlikely to rise any time soon.
Whatever happens in the markets, the study's findings might help keep plan participants in general from panicking and rushing to the exits.
"This research provides a meaningful analysis of the potential for 401(k) participants to accumulate retirement assets because it examines how a consistent group of participants' 401(k) accounts change over time," Sarah Holden, ICI's senior director of retirement and investor research and coauthor of the study, said in a statement. "The research highlights that contributing and investing in a 401(k) plan consistently results in higher average account balances than the average balance for all plan participants."
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