You've doubtless heard all sorts of horror stories from investors who've lost huge chunks of their retirement savings over the past year. Given how common those stories have become, you might expect that nearly all retirement savers would have given up on stocks and retreated to more conservative investments by now.

In reality, though, a huge majority of those who participate in an employer’s retirement plan have stuck with their investing plans. As a recent study shows, although typical investors have lost a significant amount of money since the beginning of 2008, their losses aren't as bad as you'd think -- and having avoided panic selling, they remained poised to capture gains as stocks have recovered.

Staying the course
The study, conducted by Vanguard's Center for Retirement Research, looked at the behavior of 3.2 million participants across 2,200 employer plans managed by the Vanguard Group. During 2008, despite the extraordinary volatility in the markets, fully 84% of investors left their accounts alone, only making additional contributions but not switching their existing investments from one fund to another.

In addition, even among those who made some changes to their asset allocations, very few panicked by taking all their money out of stocks. Just 2% of all participants moved their portfolios entirely to fixed-income investments like bonds, while most of those who did trades only made minimal changes to their overall asset allocation.

As you'd expect during a bear market, account balances of plan participants dropped substantially from the beginning of 2008 to the end of March 2009. But they didn't drop as much as the overall stock market. The median account balance dropped by just 17% over that period, compared with the 44% decline for stocks overall. Moreover, more than one in three participants managed to avoid losses entirely.

Good news or bad news?
Of course, knowing that many investors haven't suffered bigger losses in their retirement accounts is great news. But some of the reasons behind those figures are a bit discouraging. The conclusion that the study drew was that most plan participants simply neglect their accounts, making regular automatic contributions but rarely making significant changes to their investments.

That's fine, as long as you have your investment options set up well. In the past, if you signed up for a 401(k) but didn't choose a particular fund to invest, your money would likely have ended up in a money-market fund or some other conservative investment.

Now, though, more retirement plans include diversified investment choices like target retirement funds as default choices for a plan. And as you can see from the chart below, funds like the Vanguard Target Retirement 2025 (VTTVX) give you broad exposure to lots of different investments:

Asset Class

% of Portfolio

Investments Include …

U.S. Stocks


Cisco Systems (NASDAQ:CSCO), PepsiCo (NYSE:PEP), McDonald's (NYSE:MCD)



Treasury, agency, and corporate bonds

Developed International Stocks


BP (NYSE:BP), sanofi-aventis (NYSE:SNY)

Emerging Markets


China Mobile (NYSE:CHL), Petrobras (NYSE:PBR)

Source: Morningstar. Percentages add to less than 100% due to rounding.

Poised for gains
Regardless of why investors have mostly left their retirement accounts alone during the bear market, their lack of panic has put them in a position to reclaim some of their lost net worth -- and that's definitely good news. Since the end of the study on March 31, the S&P 500 has risen about 18%. Also, some of the money that participants invested during the low points over the past nine months is already showing substantial gains -- gains that will especially encourage more aggressive investors who've seen the bigger losses in their accounts.

Simple investing strategies are often best, and it's clear that many retirement savers have found that sticking to one plan through thick and thin makes them more comfortable than trying to zig and zag in response to the market's every move. In addition to being a much easier strategy to follow, leaving your investments alone while continuing to make new contributions is more likely to pay off in the long run.

For more on preserving your retirement savings, read:

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Fool contributor Dan Caplinger hasn't panicked yet. He doesn't own shares of the companies mentioned. Petroleo Brasileiro and PepsiCo are Motley Fool Income Investor selections. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy always sticks with you.