Summary
In this study, public-sector defined contribution (DC) plan participant savings behaviors are analyzed. Specifically, balances, contributions, loan usage, and asset allocation by participants’ age and tenure are examined. Some of the key findings include:
Account Balances
- The average account balance for public-sector DC plan participants increased with age and tenure. For instance, the average account balance for participants in their 40s with zero to two years of tenure was $21,886, compared with $70,501 among those with 11 to 20 years of tenure in the same age group.
- The median account balance ranged from $3,017 for those in their 20s to $38,124 for those in their 60s.
Contributions
- The average employee contribution amount for those in their 40s was $4,453 per year, while the median contribution was $2,563.
- The average employee contribution rate (employee contributions divided by salary) was 7.6 percent. This rate increased with age, from 5.2 percent for those in their 20s to 8.4 percent for participants in their 50s, before decreasing to 8.2 percent for those in their 60s.
Loan Usage
- Among participants with access to plan loans, the percentage of those who take loans from their plans by age was hump-shaped, going from 3.9 percent of participants in their 20s to 14.6 percent of participants in their 50s, and decreasing to 10.4 percent of participants in their 60s.
- Participants in their 50s had the highest average outstanding loan balance of $9,023, but they also had the second lowest loan as a percentage of the total account balance of 16.5 percent.
Asset Allocation
- Participants in their 20s had the largest allocations to target-date funds (42.7 percent).
- Allocations to bond funds and money market/stable-value funds increased with age, reaching 7.7 percent and 20.7 percent, respectively, for participants in their 60s, compared with 4.6 percent and 5.5 percent for those in their 20s.