Financial crisis undercuts retirement

NEW YORK, Jan. 29 (UPI) -- Three large U.S. pension plan management firms reported sharp drops in average account values, as the financial crisis is threatening retirement plans.

Fidelity Investments said the average value of their 11 million 401(k) accounts dropped 27 percent in 2008 to $50,200, The Washington Post reported Thursday.

Vanguard, managers of 3.5 million accounts, said their average account lost 28.5 percent last year. The value of the average T. Rowe Price account also fell 27 percent.

"The financial collapse just drives home how fragile these plans are," said Alicia Munnell, director of Boston College's Center for Retirement Research.

While some employers curtailed or stopped contributing to retirement accounts last year, some went so far as to dip into the accounts with hardship withdrawals, the Post said.

"I'm going to eat my retirement for breakfast, lunch and dinner right now," said Teresa Ghilarducci, a professor of economic policy analysis at New York's New School for Social Research.

"It shows that the outcome of this crisis is not only that the account balance is down, but that they're taking out part of their principal."

"It means that it will take longer to retire," she said.