A Memorable May For Younger 401(k) Participants

May was a good month for younger 401(k) savers, with the average account balance surging 2.8%.

That was even better than April, when those aged 25-34 with just 1-4 years of tenure rose 2.3%, according to estimates from the nonpartisan Employee Benefit Research Institute (EBRI). Of course, the increase in balance wasn’t just the beneficiary of the markets; those gains, based on the actual contribution records and investment choices of several million consistent participants in the EBRI/ICI database, were influenced by contributions and withdrawal/loan activity, as well as investment performance.

Not that older, higher tenured participants didn’t also see nice gains; the average account balance of those aged 55-64 with more than two decades of tenure with their current employer, climbed 1%, double the 0.5% gain in April. Older, higher tenured participants tend to have larger account balances, and the movement in average balance tends to be more influenced by market moves than contribution flows.

Those gains, based on the actual contribution records and investment choices of several million consistent participants in the EBRI/ICI database, were influenced by contributions and withdrawal/loan activity, as well as investment performance.

Drawing from that database, which includes demographic, contribution, asset allocation and loan and withdrawal activity information for millions of participants, EBRI has produced estimates of the cumulative changes in average account balances — both as a result of contributions and investment returns — for several combinations of participant age and tenure.

You can access reports of both cumulative and monthly average account changes here.

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