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Recent research finds 401(k)-style defined contribution plans have lost their shine. IRAs and 401(k) plans lost a combined $2.8 trillion, or 47% of their value, between September 2007 and December 2008, the height of the economic recession.

One thing that can happen during a recession or economic downturn is that some people take loans out from their 401(k). A 401(k) that had a pre-recession worth $100,000 may go down to a worth of only $50,000 if the 401(k) holder takes a $50,000 loan from it. The 401(k) has now lost 50% of its value.

culcha
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