Participants who stayed with their 401(k) in 2014 should find a lot to like in those end-of-year statements.
The average account balance of those ages 55-64 with more than two decades of tenure with their current employer was up more than 14% from the balance at Dec. 31, 2013. This trend was not limited to older, more tenured workers. The average account balance of those ages 25-34 with just one to four years of tenure was 47.9% higher, according to an analysis by the Employee Benefit Research Institute (EBRI) of the EBRI/ICI database.
Those gains weren’t all attributable to market returns, of course — contributions and withdrawal/loan activity also play a role. Older, higher-tenured participants tend to have larger balances, and the movement in average balance tends to be more influenced by market moves than contribution flows. On the other hand, the percent change in average account balance of participants in their 20s is more heavily influenced by the size of their contributions relative to their account balances.
EBRI, through the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project, includes data provided by a wide variety of record keepers and, therefore, portrays the activity of several million participants in 401(k) plans of varying sizes — from very large corporations to small businesses — with a variety of investment options.
Drawing from that database, which 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.
