Average 401(k) Balances Blossomed in May

The balances of consistent 401(k) plan participants continued to enjoy solid growth in May, according to a new report.

Younger and less tenured workers enjoyed the strongest uptick — with the average 401(k) balance among those aged 25-34 and with 1-4 years of tenure gaining 2.8% during the month, according to an analysis by the nonpartisan Employee Benefit Research Institute (EBRI).

The average balance of older workers, notably those with 20-29 years of tenure, aged 55-64, gained ground, but only 1.3%, according to the report.

The accounts of younger, less tenured workers are more likely to be influenced by contribution flows, while the latter category tends to be more sensitive to market swings due to those workers’ larger account balances.

Earlier Movements

The average balance of older workers, notably those with 20-29 years of tenure, aged 55-64, gained 0.6% in April, on top of the 4.5% increase in March. At the same time, the average account balance of younger, less tenured (age 25-34, with 1-4 years of tenure) workers gained 1.9%, on top of March’s 6.9% rise.

The estimates, based on the EBRI/ICI database, 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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