March Markets Take Wind Out of Sails for 401(k) Balances

March went out like a bear, not a lamb, for average 401(k) balances.

In March, estimates based on the actual contribution records and investment choices of several million consistent participants in the EBRI/ICI database indicated that the average 401(k) account balance for younger (25-34), less tenured (1-4 years) workers slipped 0.4% in March, following a decline of 1.8% in February (at least those who had an account balance at the end of 2014).

Older (age 55-64) workers with more than 20 years of tenure shed 1.1% in March on top of February’s 2.5% loss, according to estimates by the nonpartisan Employee Benefit Research Institute (EBRI).

Contributions ‘Count’

Still, January’s robust gains meant that, for the first quarter of 2018, younger (25-34), less tenured (1-4 years) workers closed 3.0% higher. On the other hand, the older (age 55-64), more tenured cohort (more than 20 years), who tend to have larger account balances, and are generally more influenced by market moves, ended the quarter 0.8% lower than it began the year.

Up till February, the average 401(k) balance had been surging, according to EBRI’s analysis. EBRI previously found that the average account balance for younger (25-34), less tenured (1-4 years) workers gained 43% in 2017 (at least those who had an account balance at the end of 2014), while the average 401(k) account balance of those aged 55-64 with more than 20 years of tenure ended the year nearly 20% (19.5%) higher than they began 2017.

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.

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