Having climbed into positive territory for 2020 in June, the average 401(k) balance continued to gain ground in July.
The S&P 500 wound up 5.5% higher in July—the fourth monthly gain in a row, and its largest four-month percentage gain since December 1998.
As it turns out, the average 401(k) balance of older (age 55-64) workers with more than 20 years of tenure is up 5.5% year-to-date, according to estimates[i] from the nonpartisan Employee Benefit Research Institute (EBRI). That group’s balances are generally more influenced by market moves than contributions. On the other hand, the average 401(k) balance of younger (25-34), less tenured (1-4 years) workers—where contributions have a larger proportionate impact—is now up 11.3% year-to-date.
The gains come on top of what was the best quarterly market in decades, when 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%.
For the month of July, the younger, less tenured cohort’s average 401(k) was up 5.1%, while the older cohort’s rose 4.0%.
[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.
