401(k)s Keep Gaining Ground

In what has traditionally been a bad month for stocks, the average 401(k) balance continued to gain ground in September.

According to estimates from the nonpartisan Employee Benefit Research Institute (EBRI) based on the actual contribution records and investment choices of several million consistent participants in the EBRI/ICI database, the average 401(k) account balance for younger (25-34), less tenured (1-4 years) workers climbed another 2.2% during the month, adding to August’s 3.9% surge, which in turn built on July’s 4.3% gain.

Even among older (age 55-64) workers with more than 20 years of tenure, whose average balance is generally more influenced by market moves than contributions, the average 401(k) balance crept 0.6% higher, adding to the 2.4% rise in August, nearly matching July’s 2.5% rise.

Quarterly and YTD Data

For the third quarter of 2018, the average 401(k) account balance for younger (25-34), less tenured (1-4 years) was up 11.2%. Among older (age 55-64) workers with more than 20 years of tenure, the average 401(k) balance was 5.4% higher.

As for year-to-date, the average 401(k) balance for that younger cohort is up 25.7%, while the older, more tenured group’s average 401(k) balance is 7.6% higher.

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.

 

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