Recordkeeping data for the first half of 2019 shows that Americans were quite content saving in their 401(k) plans and taking advantage of the long-running bull market.
According to the Investment Company Institute’s latest recordkeeper data contained in “Defined Contribution Plan Participants’ Activities, First Half 2019,” only 1.3% of DC plan participants stopped contributing to their plans in the first half of 2019. This appears to be the lowest mark going back 10 years, when, for example, the data shows that 4.6% stopped contributing during the first half of 2009.
ICI’s study tracks contributions, withdrawals and other activity, based on DC plan recordkeeper data covering more than 30 million participant accounts in a broad range of employer-based DC plans. The report shows that of the nearly $30 trillion of U.S. retirement assets overall, 28% were defined contribution assets.
Additionally, most DC plan participants stayed the course with their asset allocations as stock values generally rose during the first six months of the year (during this period, the S&P 500 total return index was up 18.5%). The report shows that in the first half of 2019, only 6.1% of DC plan participants changed the asset allocation of their account balances and 3.6% changed the asset allocation of their contributions. ICI notes that this level of activity was slightly lower than the activity observed during the same time frame in 2018.
DC plan withdrawals also remained low in the first half of 2019. During this period, 2.5% of DC plan participants took withdrawals, compared with 2.2% in the first half of 2018. Hardship withdrawal levels were also low, with only 1.1% of DC plan participants taking such withdrawals during the first half of 2019, compared with 0.9% in the first half of 2018.
Loan activity among DC plan participants edged up at the end of June 2019. ICI notes that this activity has followed a seasonal pattern over the past several years, with the percentage of DC plan participants with loans outstanding in the first quarter of the year tending to be lower compared with later quarters. At the end of June 2019, 16.3% of DC plan participants had loans outstanding, compared with 15.9% at the end of March 2019 and 16.7% at year-end 2018.
