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Average 401(k) Still Shining in February

Industry Trends and Research

Punxatawny Phil’s prediction of an early spring may have been off the mark, but February was another good month for 401(k) balances.

While the second month of 2019 wasn’t exactly a “Groundhog Day” repeat of January, according to estimates from the nonpartisan Employee Benefit Research Institute (EBRI) — the average 401(k) account balance for younger (25-34), less-tenured (1-4 years) workers was still 3.8% higher at month-end. And if that was off the 7.5% growth surge in January, it was much better than the 4.9% decline in December.   

As for older (age 55-64) workers with more than 20 years of tenure, that average balance grew 2.1%.  Generally more influenced by market moves than contributions, that group’s average 401(k) balance climbed 5.4% in January, reversing the 4.7% decline in December. Remember that the EBRI estimates are based on the actual contribution records and investment choices of several million consistent participants in the EBRI/ICI database.

That analysis, based on EBRI’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, is unique because 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.

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 find those results here.