Average 401(k) Balance Still ‘Hot’ in January
President Trump keeps talking up 401(k) balances — and the January results for the average 401(k) account balance certainly support that.
An analysis by the nonpartisan Employee Benefit Research Institute (EBRI) found that the average account balance for younger (25-34), less tenured (1-4 years) workers gained 5.3% during the first month of 2018 (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 got the year off to a solid start with a 2.9% increase in the average 401(k) account balance. The latter, who tend to have larger account balances, are generally more influenced by market moves, while the opposite generally holds true for younger workers, whose smaller balances mean that contribution flows generally have a larger effect on the rate of increase.
Not that January was a shift in direction. The markets — and average 401(k) balances — have been on a tear all year long. 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). 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 the year, according to the analysis.
All those estimates were based on the actual contribution records and investment choices of several million consistent participants in the EBRI/ICI database. 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