Treats, Not Tricks, for Average 401(k) Balance in October

For a month that has had more than its fair share of market tumbles (including 1929, and the 30th anniversary of the 1987 crash), October turned out to be a “treat” for average 401(k) balances.

Among younger (age 25-34), less tenured (1-4 years) workers, the average 401(k) account balance ended October up 3.2%. Among older workers – those aged 55-64 with more than 20 years of tenure – the average 401(k) balance rose 1.8% during the month.

That was on top of, and somewhat better than, the prior month, when the average 401(k) account balance ended September 2.8% higher than it began the month, and older workers, where the average 401(k) balance climbed 1.3% during September.

That analysis, based on EBRI’s huge database of some 24 million 401(k) plan participants in 64,619 employer-sponsored 401(k) plans representing $1.536 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.

Of course, younger workers have smaller balances, and that means that contribution flows, rather than market moves, generally have a larger effect on the rate of increase. On the other hand, 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.

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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