American workers exited 2010 with more than $10.2 trillion invested in employer-sponsored retirement plans, up10% from the $9.3 trillion in play at the close of 2009, according to a new report from Chicago-based investor consultant Spectrem Group.

The beefed-up portfolios is just the latest sign that investors are finally starting to regain confidence in the market and, perhaps more important, making a concerted effort to stash away assets for their golden years.

The last time employer-sponsored retirement plans were almost as flush was back in 2007 when workers invested a total of $10.3 trillion. Individual retirement accounts were even more popular last year, surging more than 12% to a total of $4.8 trillion.

The figures come at time when investors, particularly those of the high net worth and ultra net worth ilk, are expressing optimism not only about the stock market but the short- and long-term prospects for their individual businesses and industries.

According to the report, defined contribution plans grew 12.2% in 2010 to more than $5.1 trillion, with 401k contributions increasing to more than $2.67 trillion, up13.6% from 2009. Defined benefit plans rose 7.1% to roughly $5 trillion.

Despite the uptick in overall retirement savings contributions, the report notes that many companies -- particularly small ones -- have yet to resume the matching programs that first incentivized workers to participate in the first place.

"The growth of 401k and other savings type defined contribution plans was driven by both strong investment returns in 2010 and by ongoing employee and employer contributions," the report authors write. 

“While many employers have restored the matching contributions they reduced or eliminated following the financial crisis, there remains a significant minority, particularly among smaller companies, that have either not restored the match or who are matching at a lower level than was the case two years ago,” they add.

When it comes to equities, it was a different story and one that reflects the nagging sense of volatility and general distrust some investors still hold toward large corporations and the financial institutions that invested so much of their lost savings in these disreputable companies.

In 2010, 401k assets held in fixed income vehicles represented only 29% of all plans, down from 39% in 2009. Meanwhile, target date and other asset allocation funds inched up from 15% of the total to 16% last year.

The overall investment mindset of baby boomers, who are struggling to make up for recent losses just at the time that so many are entering or close to entering retirement, was a mixed bag.

The report found that the 12% of boomers who said they expect their retirement accounts will have more than $1 million by the time they're ready to shut it down are on track and will be well prepared for retirement.

However, the 22% who expect their accounts to hold less than $300,000 said they feel considerably less prepared for their looming retirements.

"Assets are up and they appear to be invested in a way that will generate strong growth so long as investment returns remain near their historic averages," the report authors explain. “At the individual level, however, there is still a sizable proportion of individuals who are saving enough to maintain their quality of life in retirement.”

Barrett writes for Financial Planning, a SourceMedia publication.

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