We could all use some good news—and it looks like those Q2 statements will bring some.
In what was the best quarterly market in decades, the average 401(k) account for younger (25-34), less tenured (1-4 years) workers surged 17.6%, while that of older (age 55-64) workers with more than 20 years of tenure gained 13.3%, according to estimates[i] from the nonpartisan Employee Benefit Research Institute (EBRI).[ii]
How good was the quarter? The S&P 500 finished the second quarter up 515.70 points, or 20%, to 3100.29, its biggest percentage gain since the last three months of 1998, while the Dow Jones Industrial Average wound up 3895.72 points, or 18%, to 25812.88, for its best quarter since 1987. The rally has cut the indexes’ losses for the year to 4% and 9.6%, respectively, according to the Wall Street Journal—and the NASDAQ did even better.
Year-to-date the younger, less tenured cohort’s average 401(k) is now up 5.9%, while the older cohort is up 1.4%. In fact, all four generational/tenured cohorts tracked by EBRI are now in the black for 2020.
June Boon?
Indeed, despite the volatility in the markets, in June alone the average 401(k) for the younger cohort rose 2.6%, adding to April’s 9.8% surge and May’s 4.4% recovery.
As for older, more tenured workers, whose balances generally more influenced by market moves than contributions (while contributions have a larger proportionate impact on the younger group, which typically has smaller account balances), June added 1.6% to those, on top of April’s 8.1% rebound and May’s 3.2% increase.
[i]EBRI’s analysis is based on the organization’s huge database of some 26 million 401(k) plan participants in more than 101,000 employer-sponsored 401(k) plans representing nearly $2 trillion in assets. It includes data provided by a wide variety of plan recordkeepers and, therefore, portrays the activity of participants in 401(k) plans of varying sizes—from very large corporations to small businesses—with a variety of investment options.
