They say that what goes up must come down. And so, after a pretty solid run, so did the average 401(k) balance in May.
In May, the average 401(k) balance for those aged 25-34 with 1-4 years of tenure slid 2.9%, dampening the lift from April’s 4.3% increase following the first quarter’s 15.3% surge. Year-to-date those balances, based on the actual contribution records and investment choices of several million consistent participants in the EBRI/ICI database, are still up 16.8%.
As for older (age 55-64) workers with more than 20 years of tenure, that average balance tumbled 3.1%, wiping out April’s 2.6% gain. However, those balances, which tend to be more sensitive to market swings due to those workers’ larger account balances, are still ahead 9.4% year-to-date. The accounts of younger, less tenured workers are more likely to be influenced by contribution flows.
EBRI’s analysis, based on the non-partisan organization’s huge database of some 27.1 million 401(k) plan participants in nearly 111,000 employer-sponsored 401(k) plans representing some $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.
