Several of the most infamous stock market declines in history have happened in October – which turned out to be a bit of a fright for the average 401(k) balance.
Snapping a long winning streak, estimates from the nonpartisan Employee Benefit Research Institute (EBRI) note that the average 401(k) account balance for younger (25-34), less tenured (1-4 years) workers slid 3.7% in October, a sharp turnaround from September’s 2.2% gain.
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 dipped 4.2%.
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.
The EBRI estimates are based on the actual contribution records and investment choices of several million consistent participants in the EBRI/ICI database.
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.
