The Vanguard Group Inc. said Wednesday that 60 percent of participants who continued to contribute and stayed invested have more money in their accounts than they had in September 2007 before the market decline.
That means 40 percent of continuous participants have lower balances, although Vanguard said most of them are less than 20 percent below their earlier peak value.
Younger workers with smaller balances caught up the quickest. Nine in 10 participants under age 25 were flat or were ahead of their balance two years ago. About eight in 10 workers in their mid-20s to mid-30s had recovered to 2007 levels. However, just half of the participants in their 50s and 60s have recovered or gained slightly while half have not.
Vanguard looked at participant balances between September 2007 and September 2009, a period during which the market peaked in October 2007 and declined dramatically in 2008 and early 2009. The company based in Valley Forge, Pa., has 1.7 million retirement account participants.
Recovery depends heavily on whether the participant continued to put money into their account and their company maintained its match. Having the money spread between stocks and bonds also helped as did the market's 60 percent gain since the March low.
"Our evidence suggests that ongoing contributions plus improvement over time in the capital markets may restore many more of these individuals to their pre-October 2007 wealth levels, perhaps more rapidly than previously anticipated," Stephen P. Utkus, head of the Vanguard Center for Retirement Research, said in a statement.
It's the second major provider in almost two weeks to say recovery has come for millions of workers saving for retirement.
Fidelity Investments released a report on Nov. 19 that said the average account balance was up 13 percent to $60,700 by the end of the third quarter from the end of the prior quarter. The average account increased 28 percent from the end of the first quarter in March when the stock market hit its low to the end of September.
Fidelity, based in Boston, said it also looked at the personal rates of return for individuals to see how the accounts fared when additional contributions from individuals and their company were excluded. The return measures an account's investment performance over a given period of time. As of Sept. 30, the median one-year rate of return for participants was a positive 0.4 percent.
Michael Doshier, Fidelity's vice president of the workplace investing group, acknowledged it wasn't a huge number, but it's significant that the number turned positive much sooner than most people might have expected.
Fidelity's analysis included more than 11 million 401(k) participants.