September the Worst Month for Stocks — and 401(k) Balances?

In a month that has traditionally been the worst for U.S. stocks, how did average 401(k) balances fare?

The S&P 500 lost 2.6% over the month and dropped 6.9% over the past quarter, while the Dow Jones Industrial Average, declined 1.5% over the month and 7.6% over the quarter.

However, according to estimates by the nonpartisan Employee Benefit Research Institute (EBRI), the average balance of older workers, notably those with 20-29 years of tenure, aged 55-64, slipped just 0.9% in September, though that came on top of the 3.6% decline in August.

That said, the average account balance of younger, less-tenured (age 25-34, 1-4 years of tenure) workers was flat during the month, following a 3.0% loss in August. EBRI’s estimates are based on contribution records and actual 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, while the accounts of younger, less tenured workers are more likely to be influenced by contribution flows.

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 access reports of both cumulative and monthly average account changes here.

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