What does consistent participation in 401(k) plans produce? Much bigger balances, according to a new report.
The analysis of a consistent group of 401(k) participants by the non-partisan Employee Benefit Research Institute (EBRI) from year-end 2007 to year-end 2013 found that, at year end 2013, the average account balance among consistent participants was more than twice the average account balance among all participants in the EBRI/ICI 401(k) database, and the consistent group’s median balance was more than four times the median balance across all participants at year-end 2013.
Not that there haven’t been bumps along the way; the average 401(k) account balance fell 25.8% in 2008, and then rose from 2009 through year-end 2013. Overall, the average account balance increased at a compound annual average growth rate of 10.9% from 2007 to 2013, to $148,399 at year-end 2013.
The median (midpoint) 401(k) account balance increased at a compound annual average growth rate of 15.8% over the period, to $75,359 at year-end 2013.
The percentage change in average account balance of participants in their 20s was heavily influenced by the relative size of their contributions to their account balances. These participant balances increased at a compound average growth rate of 46.6% per year between year-end 2007 and year-end 2013.
