Fidelity: More stock plan participants use assets to invest
Individuals who participate in company stock plans are increasingly earmarking the assets for investment or retirement instead of paying off debt – a shift that offers some hope that segments of the population are starting to be able to refocus on saving rather than just paying off bills, Fidelity Investments said today.
The Boston-based investment company found that more than half (57 percent) of company stock plan assets are being allocated for eventual investment or retirement savings after participants sell them. Just 13 percent are targeted for paying bills or debt in the future. In past years, about a third of assets were allocated for bill payment, and only a quarter targeted for savings and investment, Fidelity said.
One explanation for the shift may be that company stock plan participants tend to be bigger savers to begin with. According to the study of 1,820 stock plan participants from 107 companies, these individuals are saving about 18 percent of their annual household income.
Compare that to the national average – the personal savings rate as of Aug. 30 was just 4.2 percent, according to the government.
The big savers are putting the most effort into their retirement funds. A little more than half of their savings go into a 401(k) type of plan, followed by a personal savings account and the company stock plans. Other savings are socked away in brokerage and IRA accounts, or “other” vehicles, Fidelity said.
Those participants in restricted stock and stock option plans are also doing a better job of keeping track of the value of their grants/options and the vesting schedules. Many cited the economic downturn for prompting their increased interest. With the recession and related market volatility, stock plan assets have become more important to an overall financial program than they were before the downturn, Fidelity said.
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Christine Dunn has almost two decades of experience writing about finance and business issues. As founder and president of Savoir Media, she works with companies and executives on developing strategic, integrated media and marketing programs. Prior to starting her business, she worked at Bloomberg News, where she served as Boston Bureau Chief and ran industry coverage for several national teams of reporters, including consumer/retail, mutual funds and education. To reach her directly, email ChristineODunn@gmail.com or join her on Facebook at www.facebook.com/ChristineODunn.Recent blog posts
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