Average 401(k) Balances Bounce Back in July

After a June dip, those average 401(k) balances bounced back strongly in July, according to a new report.

The average account balance for younger (25-34), less tenured (1-4 years) workers up 4.3% in July after market losses in June essentially negated the positive impact of contributions made during the month.

As for older (55-64) workers with more seniority (20-29 years of tenure), their average account balance climbed 2.6% after slipping 1.5% in June, according to estimates from the nonpartisan Employee Benefit Research Institute (EBRI).

July’s performance was also stronger than May, when the average balance of younger, less tenured 401(k) savers was up 2.8%, while the average balance of the older group experienced a 1% increase. April also saw increases in the average account balances, albeit much smaller ones.

Those estimates were based on the actual contribution records and investment choices of several million consistent participants in the EBRI/ICI database.

Older, higher tenured participants tend to have larger account balances, and the movement in average balance tends to be more influenced by market moves than contribution flows.

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 http://www.ebri.org/?fa=401kbalances.

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