EBRI Issue Brief

What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Plan Account Balances, 2010–2019

Jun 30, 2022 18  pages


401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2019” reported year-end 2019 account balance, asset allocation, and loan activity results for the EBRI/ICI 401(k) database, which consists of a large cross section of 11.1 million 401(k) plan participants. This paper presents a longitudinal analysis—the analysis of 401(k) participants who maintained accounts each year from 2010 through 2019—that was not included in the previous report. The longitudinal analysis tracks the account balances of 1.3 million 401(k) plan participants who had accounts in the year-end 2010 EBRI/ICI 401(k) database and each subsequent year through year-end 2019 (a nine-year period). The entire series of research updates is available at www.ebri.org/retirement/401(k)-database.

For all of the figures in this report, components may not add to the totals presented because of rounding.

Key Findings:

This paper provides an update of a longitudinal analysis of 401(k) plan participants drawn from the EBRI/ICI 401(k) database.

Because the annual cross sections cover participants with a wide range of participation experience in 401(k) plans, meaningful analysis of the potential for 401(k) participants to accumulate retirement assets must examine the 401(k) plan accounts of participants who maintained accounts over all of the years being studied (consistent participants). For example, because of changing samples of providers, plans, and participants, changes in account balances for the entire database are not a reliable measure of how individual participants have fared. A consistent sample is necessary to accurately gauge changes, such as growth in account balances, experienced by individual 401(k) plan participants over time.

A few key insights emerge from looking at the 1.3 million consistent participants in the EBRI/ICI 401(k) database over the nine-year period from year-end 2010 to year-end 2019.

  • The average 401(k) plan account balance for consistent participants rose each year from 2010 through year-end 2019, with the exception of a slight decline in 2018. Overall, the average account balance increased at a compound annual average growth rate of 15.6 percent from 2010 to 2019, rising from $58,658 to $216,690 at year-end 2019.
  • The median 401(k) plan account balance for consistent participants increased at a compound annual average growth rate of 18.8 percent over the period, to $108,433 at year-end 2019.
  • The growth in account balances for consistent participants generally exceeded the growth rate for all participants in the EBRI/ICI 401(k) database.

Younger 401(k) participants or those with smaller year-end 2010 balances experienced higher percent growth in account balances compared with older participants or those with larger year-end 2010 balances. Three primary factors affect account balances: contributions, investment returns, and withdrawal and loan activity. The percent change in average 401(k) plan account balance of participants in their thirties was heavily influenced by the relative size of their contributions to their account balances and increased at a compound average growth rate of 26.0 percent per year between year-end 2010 and year-end 2019.

401(k) participants tend to concentrate their accounts in equity securities. The asset allocation of the 1.3 million 401(k) plan participants in the consistent group was broadly similar to the asset allocation seen in the annual EBRI/ICI 401(k) database updates. On average at year-end 2019, more than two-thirds of consistent 401(k) participants’ assets were invested in equities—through equity funds, the equity portion of target date funds, the equity portion of non–target date balanced funds, or company stock. Younger 401(k) participants tend to have higher concentrations in equities than older 401(k) participants.