The average 401(k) account balance for participants consistently participating in their 401(k) plans for the four years from 2007 through 2011 was up 23.5 percent at year-end 2011 compared with year-end 2007, despite the sharp decline caused by the bear market in 2008, according to a report released today by EBRI and ICI.
The annual EBRI/ICI 401(k) database update report is based on large cross-sections of 401(k) plan participants. Whereas the 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 how a consistent group of participants’ accounts change over time. Looking at consistent participants in the EBRI/ICI 401(k) database in the wake of the financial crisis (over the four-year period from year-end 2007 to year-end 2011):
- The average 401(k) account balance fell 34.8 percent in 2008, then rose from 2009 to 2011. Overall, the average account balance increased at a compound annual average growth rate of 5.4 percent over the 2007–2011 period, to $94,482 at year-end 2011.
- The median 401(k) account balance (half above, half below) increased at a compound annual average growth rate of 11.5 percent over the period, to $42,082 at year-end 2011.
- Analysis of a consistent group of 401(k) participants highlights the impact of consistent participation in 401(k) plans. At year-end 2011, the average account balance among consistent participants was 60 percent higher than the average account balance among all participants in the EBRI/ICI 401(k) database. The consistent group’s median balance was about two-and-a-half times the median balance across all participants at year-end 2011.
- Younger participants or those with smaller initial balances experienced higher percentage growth in account balances compared with older participants or those with larger initial balances. There are three primary factors that impact account balances: contributions, investment returns, and withdrawal/loan activity. The percentage change in average account balance of consistent participants in their 20s was heavily influenced by the relative size of their contributions to their account balances and increased at a compound average rate of 41.0 percent per year between year-end 2007 and year-end 2011.
- 401(k) participants tend to concentrate their accounts in equity securities. The asset allocation of the 8.6 million 401(k) plan participants in the consistent group was broadly similar to the asset allocation of the 24.0 million participants in the entire year-end 2011 EBRI/ICI 401(k) database. On average, about three-fifths of 401(k) participants’ assets were invested in equities, either through equity funds, the equity portion of target date funds, the equity portion of non–target date balanced funds, or company stock. Between year-end 2007 and year-end 2011, the allocation of consistent participant balances to equities, edged back from 42.9 percent of participants with more than 80 percent of their accounts in equities to 38.4 percent at year-end 2011. The percentage of consistent 401(k) participants without any allocation to equities remained unchanged at 11.8 percent.
In Thirty-o contrast, Employee Be ne per the cent avera nefits Se of g th e e acc pa curit o rticipants unt y Administrati balanc in e th of e ol consistent on (Jun der partici e). Av samp pants ailable at le or we those re in twith heir lon 50s ger or te 60nures s, compar , both ed ofwith whic32 h tpercent ended to of Jack VanDerhei is director of Research at EBRI. Sarah Holden is senior director of Retirement and Investor Research at 401(k) Participants in the Wake of the Financial Crisis: Figure 3 Figure 5 65th birthday. The equity portion was estimated using the i Figure 1 ndustry average equity percentage for the assigned target-date have References participants www.d larger o ba in l.g lances the ov/EBRI ebsa/pdf/201 at /ICI the beginni database 1pensionpl ng over of th all. e an stu bulletin.pdf dy period, showed more modest percentage growth (Figure 6). For ICI. Luis Alonso is director of Information Technology and Research Databases at EBRI. Steven Bass is associate Distribution of 401(k) Account Balances by Size of Account Balance Changes in Account Balances, 2007–2011 Average Account Balances Among 401(k) Participants Present Consistent Sample Was Older Than All Participants in fund calculated using the Morningstar Lifecycle Allocation Index. example, the average account balance of participants in their 60s increased 3.5 percent (a 0.9 percent compound economist at ICI. This Issue Brief was written with assistance from the research and editorial staffs at EBRI and ICI. Aon Hewitt. 2012. P2012 ercenta Ung iverse e of pa Bench rticipa marks nts w . Lincol ith acc nshire, ount balanc IL: Aon es Hewitt. in specified ranges, 2011 Mark Your Calendar! a b The tenure composition of the consistent sample also was similar to the tenure composition of 401(k) participants in VanDerhei, Jack , Sarah Holden, Luis EBRI/ICI Alonso, and Stev 401(k) Database at en Bass. 201 Year-End 2011 2. “401(k) Plan Asset Allocation, Account from Year-End 2007 Through Year-End 2011 by Age and Tenure By Jack VanDerhei, EBRI; Sarah Holden, ICI; Luis Alonso, EBRI; and Steven Bass, ICI annual average growth rate) between year-end 2007 anF d igur year-end e 4 2011. Investment returns, rather than annual Any views expressed in this report are those of the authors and should not be ascribed to the officers, trustees, or 7 10 October 2013 • No. 391 b Percentage of participants b by age, year-end 2007 and year-end 2011 the year-end 2007 EBRI/ICI 401(k) database. For example, a 36 percent of the consistent sample had five or fewer For a description of the investment options, see page 13. Balances, and Loan Activity in 2011.” ICI Research Perspective 18, no. 9, and EBRI Issue Brief, no. 380 Age Group Tenure (years) 401(k) Account 2007 Balances 2008 Among 401(k) 2009Participants 2010 2011 Barclays Capital U.S. Aggregate Bond Index. San Francisco, CA: Barclays Global Investors. contributions, generally account for most of the change in accounts with larger balances. In addition, participants in other sponsors of EBRI, EBRI-ERF, or their staffs. Neither EBRI nor EBRI-ERF lobbies or takes positions on specific 20s All $4,903 $4,932 $11,586 $16,654 b $19,392 years of tenure in 2007, compared with 38 percent of participants in the entire EBRI/ICI 401(k) database (Figure 2). 40.5% 8 (December). Available at Pwww.ici resent from .org/pd Year-E f/per18-09.pd nd 2007 T f and hrough www.ebri.org/pdf/br Year-End 2011iefspdf/EBRI_IB_12- 11 Age of Participant December 11, 2013 Where the world turns for the facts on U.S. employee benefits. their 60s tend to have a higher propensity to make withdrawals, as they approach retirement. policy The proposa National ls. EBRI i Bureau of nvite Econ s comment on omic Research this rese (NBER), arch. which pu blishes its assessment of U.S. business cycles, indicated that >2 to 5 3,165 3,917 11,212 16,669 19,712 Figure 7 20s 30s 40s 50s 60s Seventeen percent of the consistent sample had more than 20 years of tenure in 2007, as did 16 percent of the Bloomberg Data. New York, NY: Bloomberg L.P. Introduction 2012_No380.401k-eoy2011.pdf >5 to 10 6,516 6,126 13,481 19,147 22,445 Domestic Stock and Bond Market Indexes the most recent recession occurred About the EBRI/ICI 401(k) Database from December 2007 through June 2009. See National Bureau of Economic Research 30s All th25,075 17,223 32,274 41,265 44,897 participants in the entire EBRI/ICI 401(k) database. These changes in participant account balances also areflect changes in asset values during the four-year period (Figure The EBRI/ICI 401(k) dat 6% abase, which is constructed from the administrative records of 401(k) plans, represents a large Retirement and health benefits are at the heart of w Month-end level, Decemb | er 2006 toorker Decemb s’, emplo er 2012 yers’, and our nation’s 8% 2010. During this time period, the S&P 500 toEB tal RI return /ICI 401index (k) Data fell base by 35.0 percent. 10% EBRI’s 35 >2 to 5 11,476 Anniversary Celebration 8,817 20,443 27,524 30,783 The EBRI/ICI Participant-Directed Retirement Plan Data Collection Project is the largest, most representative repository 13% Deloitte Consulting LLP, International Foundation of Employee Benefit Plans, and the International Society of VanDerh 160 ei, Jack , Sarah Holden, Luis Alonso, and Craig Copeland. 2008. “401(k) Plan Asset Allocation, A $94,482 ccount | 1 7). 401(k) Partici Average Although asset allocation pants in the Wake of the Financial varied with age, and many participants held a range of investments, Crisis: stock market Copeconomic security yright Information: . Fo This re >5 to 10 unded in 1978, EBRI is port is copyright 22,241ed by the Em 15,525 the most authoritative and objective source of ployee Be 31,169 nefit Re $91, search Institut 40,644 038 e (EBRI 44,947) and the cross-section, or snapshot, of 401(k) plans at the end of each year. As a cross-section of the entire population of Barclays Capital U.S. As expected, the consistent participants whCo o w nse isre tentfollo Samwed ple | over the four-year period tended to be older and to have of 12 information about individual 401(k) plan participant accounts. As of December 31, 2011, the EBRI/ICI 401(k) Certified Employee Benefit Specialists. 2013. Annual 401(k) Benchmarking Survey: 2012 dEdition. New York, Balances, and Loan Activi >10 to 20 ty in 2007.” Investment Com 43,695 28,488 pany Institu 49,302 te Research P A61,086 ggregate B ersond pective Index 65,373 14, no. 3, and For an analysis of contribution activity during the bear market of 2000–2002 using the cross-sectional EBRI/ICI 401(k) performance had an impact on these balances because, in large part, 401(k) plan participants’ balances tended to be information on these critical, complex issues. The nonpartisan Em 25% ployee Benefit Research In|stitute (EBRI) will celebrate 35 years of 401 Investment Co (k) plan participants, mpany Institut the EBRI e. It may /ICI be u 401(k s)ed w database ithout inclu permission but des a wide citation o range of fc the ircumstances; source is re 401(k quired. ) partici pants who Changes in Account Balances, 2007–2011 24% 140 longer tenure 40s by year-end 2011, A compar ll ed with 62,318 the broader 39,459 base of 401(k 66,063 ) participa 79,604 nts in the EBR 83,690 I/ICI 401(k) database included statistical information about 24.0 million 401(k) plan participants, in 64,141 employer-sponsored NY: Deloitte Consulting LLP. Available at www.deloitte.com/assets/Dcom- EBRI Issue Brief, no. 324 (December). Available at |www.ici.org/pdf/per14-03.pdf and 26% databases, see Holden and VanDerhei 2004. The analysis finds that overall 401(k) participants’ contribution rates were little b weig hted toward S&P 5 equity 00 securities. At year-end 2011, whether looking at the consistent group or the entire EBRI/ICI providing "Just the Facts" on bene >2 to 5 fit issues at a reception to 21,937 14,729 30,404 be held W 38,958 ednesday, Dec. 11, 2013, 42,500 are young and individuals who are new to their jobs, as well as older participants and those who have been with their | $77,983 32% database. Participants in the consistent sample, by definition, had a minimum tenure of four years in 2011 (the length 401(k) plans, holding $1.415 trillion in assets. The 2011 EBRI/ICI 401(k) database covered about 47 percent of the UnitedS $76,534 tates/Local%20Assets/Documents/Consulting/us_cons_hc_401ksbecnchmarkingsurvey2012.pdf By Jack www.ebri.org/pdf/briefspdf VanDerhei, EBRI; >5 to 10 /EBRI_IB_12 Sarah Holden, 38,964 a-2008 ICI; .pdf Luis 24,982Alonso, 46,616 EBRI; an 58,142 d Steven Bass, ICI 62,472 Recommended C changed in 2000, 2001, and 2 itation: Jack Van 002 when compared to 1999. On aver Derhei, Sarah Holden, Luis A age, lonso, and Steve 401(k) participants’ n Bass. “4 cont01 ribution (k) Participa behavior nts in does the not EBRI focuses solely on employee benefits research — no lobb | ying or advocacy. 401(k) dat 120abase, altogether, equity securities—equity funds, the equity portion of target date funds, the equity portion current E from BR employers I E 6:00–8:00 pm mployee Bene for fit R ma eny s, at The Shriners’ Build eayears. rch InstitFor ute Isexa sue B mrple, ief (IS at SN year 08 ing, 1315 K St. NW, W 87 -end ?137X 20 ) is 11, pu bli 12 sh perce ed mont nhly t of by a 4 shington, DC, 20005. the 01( Ek) mploy partic ee Bipa enefit nts Rin esear the chEB Insti RI/ICI tute, of time for the longitudinal analysis), >10 to 20with 15 perc 77,887 ent having 47,776 five or fewer 80,979 years of te 96,825 nure, 28 perc 101,560 ent having between universe of active 401(k) plan participants, 12 percent of plans, and 45 percent of 401(k) plan assets. The EBRI/ICI | 9 appear to have 1100 13th S EBRI t been materially affected b . NW, stand Suite 8s 78, alone in em Washington, Dpl C y the bear mar oyee , 20005ben -4051, efits atk $3 et rese 00 in pequities er ar ych ear a or sfrom i san inclinde u 2000 ded pend as throug part eof nh t, a 2002, m nonprofit, and no ember wheth ship suer bscri measured ption. npa P rtisan erio in ddollar i- Wake of the Financial Crisis: Changes in Account Balances, 2007–2011, c” EBRI Issue Brief, no. 391 and ICI Research Figure 9 of non–target-date balanced funds, and company stock—represented Russell 2000about three-fifths of 401(k) plan participants’ >20 to 30 122,453 77,632 118,952 139,314 144,439 401(k) database were in their 20s, while 10 percent were |in their 60s (Figure 1); 16 percent of participants had two or 19.9% Holden, Sarah, and Daniel Schrass. 2012. “The Role of IRAs in U.S. Households’ Saving for Retirement, 2012.” ICI five Vangu a cal ns a d rd Group. 2013. p10 ost aye ge ars rate of paite d inure, n WHow America S ash 33 ingto perc n, Dent C, and ha a aving ves 2013: A dditional betm w ail ee ing n Report o10 ffice asn . d PO on Vanguard 2012 Defined Contr 2S 0 T MAS year Ts ER of : S te end nure, addr a es n s d cha 25 nge pe s rcent to: EBRI ibution Plan having Issue Br more ief, 11 Data than 00 . project For m is uni ore inform que because ation, contact Nevin Ada of its inclusion of data provide ms, d nadam by a wi sde @ebri.org variety of , 202/775-6329. plan recordkeepers permitting the 100 organization. It analyzes and reports research data without spin or underlying agenda. All findings, 10 50s 33% All 30% 107,358 69,593 107,090 124,539 129,508 Perspectiv amounts or e,percentage Vol. 19, no. of 7 O salacry tober they 20 contributed. 13. | Asset Allocation to Equities Varied Widely Among Participants assets (Figure 8, lower panel). However, the asset allocation of participants in the consistent sample varied with 13th St. NW, Suite 878, Washington, DC, 20005-4051. Copyright 2013 by Employee Benefit Research Institute. All rights reserved. No. 391. fewer years of tenure at their current jobs, while 5 percent had more than 30 years of tenure (Figure 2). 28% 20 yResearch ears of tenure Pers(Figure pective 218 ). , In >2 to 5 no. contrast, 8 (Decem in th ber). 26,758 e entire Avail EBRI able |18,175 /ICI at www.ici 401(k)35,750 database .org/pdf/per1 in 45,115 201 8-08.pdf 1, 38 perc 49,508 ent of participants analysis Valley F of tho wheth e rge, activity PA: The er on fi of par nan Vang ticipants cial uard Group, data, in 401(k option )Vangu s plans , or tre a ord fnds, vCe arying nter for R are reve sizes—f aling etir rom ement R an very d reli lar e able s ge ear corporatio — the re ch. Availa aso ns ble to n at small EBRI information is 13 Asset allocation distribution at year-end 2007 and year-end 2011 of 401(k) partici You can reserve your p pant age, a pattern that is lace for both events at also observed in the cross-sectional http://tinyurl.com/ott6f98 EBRI/ICI 401(k ) database.15.0% Younger participants >5 to 10 45,379 |29,655 53,182 65,397 70,753 Data from the ICI Survey of Defined Contribution Plan Recordkeepers find that DC plan participants generally stayed the 80 the gold standard for private analysts a AT A GLAN nd decision make CE rs, government policymakers, the media, and 31% had https://institu five or fewer yteional ars of .vangu tenure, ard.com/i 23 percam/p ent ha df/HAS13.pdf d between five and 10 years of tenure, 24 percent had between 10 and businesses—with a variety of investment options. Report availability: 13.0% This report is available on the Internet at a www.ebri.org and at www.ici.org This b,c report is being | >10 to 20 92,277 57,634 94,119 110,620 115,916 13.0% Although annual updates of the EBRI/ICI 401(k) database provide an invaluable perspective of 401(k) account generally tended to favor participant account balance to equities equity funds and target-date funds, w by age; percentage of participants, hile older participants were more likely to invest in 12.5% . 2013. “Defined Contribution Plan Participants’ Activities, 2012.” ICI Research Report (April). Available at the public. course through the financial crisis. The vast majority of DC plan participants continued contributing; only a negligible share | 20 years of tenure, and 15 percent >20 to 30 $49, ha 912 d more 174,295 than 20 years 110,623 of tenure. 167,017 190,771 196,019 published simultaneously as an EBRI Issue Brief and ICI Research Perspective and is available on both organizations’ a balances, asset allocation, and loan activity across wide cross-sections of participants, the cross-sectional analysis is not 60 The Employee Benefit Research Institut | e (EBRI) was founded in 1978. Its mission is to fixed-income securities such as bond funds, guaranteed investment contracts (GICs) and other stable-value funds, or 9.2% >30 Percentage of Account Balance Invested in Equities at Year-End 2007 196,487 131,027 187,214 213,064 9.2% 219,701 www.ici .org/pdf/ppr_13_rec_survey_q4.pdf took withdrawals, and a minority of participants rebalanced either their contribution investment allocations or their account December 12, 2013 25% Sources and Type of Data 23% 25% 7.9% websites at www.ebri.org/publications/ib and http://www.ici.org | /pdf/per19-07.pdf The annual EBRI/ICI 401(k) database contribute to update , to encourag report is based e, an on d to enhanc large cross-sections e the developmen of 40t of sound empl 1(k) plan part 7.5% icipa oyee ben nts. efit 60s All 130,398 85,739 123,085 135,350 135,008 7.2% well-suited to addressing the question of the impact of participation in 401(k) plans over time. Cross-sections change in money funds. >20–40 >40–60 >60–80 At year-end 2011, the consistent sample was also older, on average, than the 24.0 million participants in the entire EBRI explores the breadth of employee benefits and related issues. | Endnotes investment allocations. See Holden and Schrass 2013 for DC plan participants’ annual activities between 2008 and 2012. Who we are 5.7% d >2 to 5 31,181 21,352 38,387 46,241 49,705 programs and sound public policy through objective research and education. EBRI is the only 40 5.6% Whereas the cross-sections cover participants with a wide range of participatio 21% n experience in 401(k) plans, meaningful Several Age group EBRI and ICI members provided re Zero cords on 1–20 percent acti4.7% ve participapercent nts in 401(k)percent plans for whic percent h they kept >80 percent records at composition Holden, Sara frh, om and year Jack to ye VanDerhei ar because . 20 th01. e select “The ion Impact of data |of providers Employer-Selec and sampl ted eI o nfvestm plans ent usin O g pa tions given on provide 401(k) r vary, Plan EBRI/ICI 401(k) EBRI datab studie ases . For the worl examp d of health and retirement ben le, only 4.2% 4 percent of the participants 3.9% efits — issue in the s co such a nsistent s 40 gro 1(k)s, up wer IRAs, retire e in their 20s ment and >5 to 10 48,035 31,805 54,617 64,875 68,471 3.4% private, nonprofit, nonpar 3.3% tisan, Washington, DC-based organization committed exclusively to 3.0% 14 14 | 2.6% 2 20s 14.9 3.5 2.7% 3.7 5.7 15.2 57.0 year-en analysis For the complete update fro Emplo d of 20 th 11 e .pote These ntial yee Benefits: Hindsight, Fo plan for 401 m the year-end recordkeepers (k) participants 2011 EB in 12% clude to accum mut RI/ICI uulate al401(k) funrd e tirem comp databa ean nt se, ie asse s, resight, and Insight see 2. insuranc 0% ts Van must Der eexami hei companies, et n al., 12% e how 2012. an a d consistent consulting group firms. Among individual 401(k) participants >10 to 20in the consistent 97,081 samp 61,425 le, the all 2.3% ocation 95,687of acco107,837 unt balances to 109,550 equities at year- income 11% adequacy, consumer-driven benefits, Social Security, tax treatment of both retirement and health and Participan because 401(k ts’ Asset ) partici Alloc paa nti ts ons: join Pr or eliminary leave plan Findings.” s. In additio Working n, the an pap alysis er prepared covers 1.7% the for acco the unt Center balances for Pensi held o in n tand he public policy research and education on economic security and employee benefit issues. 21 1 percent were in their 30s (Figure 1). In the entire EBRI/I | CI 401(k) database at year-end 2011, 12 percent of partici- 20 4% For example, as of December 31, 2011, the EBRI/ICI 401(k) database included statistical information on 24.0 million 401(k) 30s >20 to 30 10.9 181,019 4.1 115,871 4.6 165,758 7.5 179,677 18.0177,385 54.9 Table of Contents of participants’ accounts change over time. Looking at consistent participants in the EBRI/ICI 401(k) database in the end Although 2011 the vari benefits, EBRI/ICI ed widely cost 401(k) aro und manage project the aver ment has ag , collecte e worker a of 61 d perc data nd ent employe from for the 19r9 con attitude 6 thr sistent ough s, policy reform p 20 grou 11, p th as e a un whole. iverse ropo At osals, f year-end data and p providers 2011, ension varies assets EBRI’s membership includes a cross-section of pension funds; businesses; trade associations; 15 401(k) Retirem plans eant t partici Research pants’ (CP current RR) Current employers. Pension Retirem Policy ent Isa ssu vings es Chel onfer d in ence, plans Miami at previous rd Univer em sity, ploO yers xford, or roll OH ed (Ju over ne pants were inCo their nsisten20s t Samp ale in 200 nd 23 7perc Eent BRI/ICI were 401(k)in Data their base in 200 30s.7 Thir Cty ons -two istent Sa pe mp rcent le in 201 o1 f the EBRI consistent /ICI 401(k) Data sampl base in 201 e we 1re in their 50s >30 235,633 157,024 212,880 227,525 222,851 Account balances are net of unpaid loan balances. Thus, unpaid loan balances are not included in any of the eight asset plan participan Join us on Decem 40s ts, in 64,141 employer-spons ber 12, 2013, from ored 401(k) plans, holding 10.1 8:30 am4.8 –1:15 pm for EBRI’s 73 $1.415 trillion in assets (see Hold 5.2 8.4 policy forum 24.0 en et al., 2012). Usin : “Employee 47.5 g <$10,000 $10,000 to >$20,000 >$30,000 >$40,000 >$50,000 >$60,000 >$70,000 >$80,000 >$90,000 >$100,000 >$200,000 and a funding. There is wi labor un despread ions; health recog care prov nition iders and insur that if employee be ers; 3, government org 4 nefits data exist, EBRI kno anizations; and service firms. ws it. wake from year of th to e fiynancial ear. In crisis additio (over n, the the sampl foure -year of plans period usin from g a year- given end provid 2007 er can to yea cha r-e nge nd . 20 Recor 11):d s were encrypted to 38.4 percent of participants in the consistent sample had more than 80 percent of their accounts invested in equities, 0 All All 76,534 49,912 77,983 91,038 94,482 Introductio into 8–9). individual n .................................................................................................................. retirement accounts (IRAs), are not included in the analysis. To explore the ........................................ 3 full impact of ongoing $20,000 to $30,000 to $40,000 to $50,000 to $60,000 to $70,000 to $80,000 to $90,000 to to and 13 percent were in their 60s, compared with 26 percent and 10 percent, respectively, in the entire database. categories described. 50s Source: EBRI/ICI Participant-Directed Retirement 11.0 Plan Data Collection 6.3 Project. 6.8 15.0 25.0 36.0 Benefits: Tomorrow, Today, Yesterday,” where we’ll examine the current benefits landscape, the National Comp Dec-06ensation surve Decy -0 data a 7 nd historical relationships and trend Dec-08 Dec-09 s evidDe ent in the c-10 Form 5500 data, EBRI and ICI Dec-11 Dec-12 Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project $100,000 $200,000 Note: The EBRI/ICI 401(k) database contains 21.8 million 401(k) plan participants at year-end 2007 and 24.0 million at year-end 2011. while conceal 11t.8 he per identity cent hof eld em nopl e oyers quities and at em all ployees, (Figure 9, but lowe we r re paco ne de l). d On so n that et, the bot h same could percenta be tracke ge d oov f ter he multi consistent ple ye ars sample . participation a in 401(k) plans, and to understand how typical 401(k) plan participants have fared over an extended 60s 14.2 8.1 10.7 18.8 18.5 29.6 The analysis is based on a sample of 8.6 million 401(k) plan participants with account balances at the end of each year from 2 The consistent sample consists of 8.6 million 401(k) plan participants with account balances at the end of each year from 2007 007 through 2011. Longitudinal Analysis 3 estimate the n 16 path(s) that led here over the past 35 years, and umber of active 401(k) participants to be ab EBRI’s work advances knowledge and unders out 51.2 million in 2011 (see what the next generation tanding of emplo endnote 2 in H of benefit plan designs yee benefits and their olden et al., 2012; and EBRI delive ? The averagr e s a stead 401(k) account y stream of invaluable research and anal balance fell 34.8 percent in 2008, then rose from ysis. 2009 to 2011. Overall, the b Size of Account Balance b This system . 2002. of through 2011. C “Can classification 401(k) omponents may Accumulations does not not add consid to 100 percent er Generate the because number of rounding. Significant of distinct In investment come for Fu options ture Retirees? presented ” to Investment a given participant, Data provided for each participant include date of birth, from which an age group is assigned; date of hire, from which held some All consistent sample equities Age and tenure groups are based on participant age and tenure at year-end 2011. in 2011 as in 2007. On the other hand, the share of participants in the consistent sample with more 11.8 5.6 6.4 11.5 21.8 42.9 perio Cons d, istent it is im Participan portant to anats Have Accumula lyze a group of consistent ted Sizable 40 participants (a lo 1(k) Account Balances ngitudinal sample). This consistent group of importance to the nation’s economy among policymakers, the news media, and the public. It EBRI publications include in-depth coverage of key issues and trends; summaries of research U.S. Department of Labor 201 will entail, tapping in3). There to the perspe e were 513,496 401(k ctives and ins ) plans in 2011 ights of an ar (see U.S. ray of leadin Department of Lab g workforce experts, or 2013) and 401(k) Consistent Par average ticipation in 401(k account balance ) inc Plans reased ...................................................................................... at a compound annual average growth rate of 5.4 percent ............................. 3 over the 2007– but rather, the types of options presenteA d. Pr nnua eliminary resea l Percent Change rch analyzi in Total Re ng 1 turn .4 Inde million participants drawn fr x om the 2000 Company Institute Per 2007 EBRI/ICI 401(k) database spective 8, no. 13.2 3, and EBRI 3.8 Issue Brief, 5.3 no. 251 (Novembe 11.2 r). Avail 23.0able at 43.4 than a tenu 80 re perc range ent is of assigned; their acc o outstandin unts investe g lo d an in ba equities lance; shi fund fted s in from the 42. par9 t icipant percent ’s inves of patment rticipants portfoli at yos; ear-e and nd asset 2007 values to participants is drawn from the anndoes this b ual cross-sections. y conducting and publishing policy research, analysis, and special reports on 40 What we do findings and policy developments; timely factsheets on hot topics; regular updates on legislative and The trends in the consistent group’s account balances highlight the accumulation effect of ongoing 401(k) participation. plan assets were $3.1 trillion (see Investment Company Institute 2013). The 2011 EBRI/ICI database covered 47 percent of futurists, and “trend tr 2011 period, to $94,482 ackers,” including: at year-end 2011. 15 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. a EBRI/ICI 401(k www.ici.org ) database sug /pdf/per08-03.pdf gests that the emplo and yee benef www.ebri.org/pdf/briefspdf/110 sheer number its issues; holding educational br of investment options 2ib.pdf iefings for EBRI memb presented does not influence ers, congressional and participants. attribute Age an dd Te to th nu ose re of fu Consiste nds. An accou nt Partic nt bala ipants nce for each participant is the sum of the participant’s assets in all funds. 3 38.4 percent at year-end 2011. The share of consistent Percentage of Account Balance Invested in Equities at Yar-End 2011 participants with more than 80 percent of their 401(k) accounts Note: At year-end 2011, the average account balance among all 24.0 million 401(k) plan participants was $58,991; the median account balance was $16,649. regulatory developments; comprehensive reference resources on benefit programs and workforce At year-end 2011, 13.0 percent of the consistent group had more than $200,000 in their 401(k) accounts at their the universe of 401(k) plan participants, 12 percent of plans, and 45 percent of 401(k) plan assets. Percentages do not add to 100 percenfederal agen t because of round cy ing s . taff, and the news media; and sponsoring public opinion surveys on employee On average, participants had 10.4 distinct options but, on average, chose >20–40 only 2.5 (see >40–60 Holden and >60–80 VanDerhei 2001). In 30 invested Plan balain nces 2007 equities are construct fell more ed amon as th 2008 g e ol sum der of partic all part ipants. icipa 27.2 For nt 2009 ba example, lances in among the plan. partici 2010 pants in their 20s, the share 2011 with 26.5 26.9 issues; and major surveys oLongit f public udi attitudes. nal Analysis Consistent Participants Have Accumulated Sizable 401(k) Account Balances 5 ? Arnold Brown d , Chairman of Weiner, Edrich, Brown, Inc. Figure 6 ? The median 401(k) account benefit issues. balance (hal EBRI’s Ed f above, h uc aation and Re lf below) incr seear ased ch Fat und a comp (EBRI-ERF) performs ound annual aver the char age it growt able, h current employers, while another 15.0 percent had between $100,000 and $200,000 (Figure 3). In contrast, in the Age group 1–20 percent percent percent percent >80 percent . 2004. “Contribution Behavior of Zero 401(k) Plan Participants During Bull and Bear Markets.” National Tax addition, the preliminary analysis found that 401(k) participants are not naïve—that is, when given n options, they do not EBRI meetings present and explore issues with thought leaders from all sectors. more 2 than 80 percent allocated to equities edged up from 57.0 percent at year-end 2007 to 57.8 percent at year-end educational, and scientific functions of the Institute. EBRI-ERF is a tax-exempt organization Because of these changes in the cross-sections, comparin Figure 2 g average account balances across different year-end cross- rate Percent Change in Average Account Balances Among 401(k) Participants Present of 11.5 percent over the period, to $42,082 at year-end 2011. T Changes in 401(k broade he Der ce 20s EBRI mber /ICI 201 ) Part 42 01EBRI (k) icip dat a Issue na ts’ Account basBrief e, 7.5 reported per Ba10.3 c lances ent h year-en a .............................................................................. d acco d 2.8 unts 2011 wit acco h mor un 3.3 t eba than lance, $2 0 asset 06.9 ,000, allocation, and 9.2 18.9 pand ercent loan ...................... 5 ha activi d 57.8 acc ty ounts ? Mike Davis, Senior Vice President of General Mills. Association 20 Proceedings, Ninety-Sixth Annual Conference on Taxation, November 13–15, 16.0 2003, Chicago, IL: 16.3 Investmen divide their ass t Option ets EBRI among regula all s n. rIndeed, ly provides less than congre 1 percent ssional of testimony participants , an follo d briefs p wed a 1/ on licy asset make allocation rs, mem strategy. ber orga Plan nizations, 2011, while the share among partici supported b pants in y th co eir ntributions 60s fell and g from rants. 29. 15.16 percent to 23.2 percent. Although the financial a b Consistent Sample Had Longer Tenure Than All Participants sectional snapshots can lead t 30s o false conclusions. For exam 9.0 3.7 ple, newly formed plans would te 4.4 8.6 nd to pull down the aver 20.4 53.8age results for the EBRI/ICI from Year-End 2007 Through Year-End 2011 401(k) database, which represents a large cross-section by Age and Tenure of 24.0 million 401(k) plan between $100,000 and $200,000. 44–53. Washi and ngton, the medi DC: N a a on employe tion11 al Tax A r sbenefits. sociation. About the EBRI/ICI 401(k) Database .................................................................................................................... 13 ? Howard Fluhr, Chairman of the Segal Company. 16 Sponsor Council of America 2012 indicates that in 2011, the average number of investment fund options available for crisis that occurred during this period in EBRI/ICI 401(k) Database may have influenced partici at Year-End 2011 pants’ allocation to equities, some of this movement In the ? EBRI Analysis 40s/ICI 40 of 1 a( k) consistent database gro , inv up es of tment 409.4 1(k) options participants are 4.9 grohigh uped lights into 5.5 th eight e imbroad pact 10.1 of c aconsiste tegories 7.8 nt . 26.8 part Equi icipat ty fuion nd43.3 s in c o4n0sist 1(k) of 10 The acco unt balanc change ine, any but wo indivi uld tell us no 7.0 dual participant thing ab ’s account out consistently balance participating workers. Simila is influenced by the magnitudes rly, the aggreg of these ate average three factors account 6.5 participants. This paper presents a longitudinal analysis—the 5.9 analysis of 401(k) participants who maintained accounts 5.5 EBRI issues press releases on newsworthy developments, and is among the most widely quoted 5.2 EBRI Issue Briefs is a monthly periodical with in-depth evaluation of employee benefi 4.2 t issues participant contributions was 19 among the 840 plans surveyed. Aon Hewitt 2012 indicates an average Compound Annual of 20 investment Median Percentage of participants by years of tenure, year-end 2007 and year-end 2011 may Sources have 50s sim and ply Tybeen pe o fnorm Dataal reallocation 11.9 as participants 7.7 approached 7.9 retirement. 18.0 25.7 28.8 13 Reflectin ? g thei Don Ezra, r higher avera past Co-chair, global consulti ge age and tenure, the consis ng at Russell Investm tent group also had m ents. edian and average account balances pooled inv plans. estments At year-end primaril 2011, y invested the average in stocks, acco includin unt balanc g equity e am mutu ong co al nsistent funds, bank 2.1 part icipa collectiv nts e was trus 60 ts, per lifec e insuran nt higher ce relative to bthe starting acco b unt balance. For example, a contributio n of a given dollar amount produces a larger growth Investmen balance would tend to be pulled down if a la t Company sources Institute. on employee Quarterly be rge number of n Supplementary efits by all media. participants retire and roll over their account balances. Data. Washington, DC: Investment Company Institute. each year from 2007 through 2011—that was not included in the previous report. The longitudinal analysis tracks the and trends, as well as critical analyses of employee benefit policies and proposals. EBRI Age Group Tenure (years) 2007–2008 2008–2009 2009–2010 2010–2011 2007–2011 Growth Rate, 2007–2011 Our options in 60s 2011. 0 Deloitte Consulting LLP, Inte17.8 rnational Foundation 10.4 of Employee 12.5 Benefit 20.6 Plans, and the 15.5 International 23.2 Society of Tenure of Participant (Years) that were much higher than the median and average account balances of the broader EBRI/ICI 401(k) database (Figure separate than acco th unts, e ave an rad ge oth acecount r pooled balance invesamo tments. ng aSimila ll participants rly, bond in fun the ds EBRI are a /IC ny I pool 401(k ed ) ac data count base. priThe marily consistent invested in 20s Investment O pEBRI tions All directs membe 0.6% rs and134.9% other constit 43.7% uencies to the informatio 16.4% 295.5% n they need and 41.0% undertakes new 13 rate when ? added Ellen Galinsky to a small b er , President, Fam account Notes relat is a monthly ive ilies and to a p lar eg riod er Work Institute. ical pr one. oviding curr On the other ent in hand, formation on a variety investment retur of emplo ns of a y given ee benefit account 3 balances of 8.6 million 401(k) plan participants present in the year-end 2007 EBRI/ICI 401(k) database and All consistent sample -1.6 11.8 6.3 7.0 13.4 23.1 38.4 Stock About half of t market re raditional IRA assets resulted turns posted in 2011 varied from rollover by the segm s ent from employer- of the marks et pon held: sored reti the Sr& ement plans. See Holden and P 500 total return index Certified Employee Benefit Specialists 2013 0 to report 2 >2 to that 5 the >5 to 10 average n >10 to 2u 0mb >er of funds off 20 to 30 >30 ered by the 401(k) plan sponsors >2 to 5 23.8 186.2 48.7 18.3 522.9 58.0 -4.2 4). At year-end 20 resea 11, th rch e av on a erage n ongoi topics. 401(k) ng EBRIef account basis. is a week balance lyof rou the ndup of EBRI r consistent grou esearch p w and as $9 insights, as well 4,482, 60 percent as updates on larger tha n bonds. Balanc . group 2013. ’ed s “Th me fun dia ed U.S. s n are balance Retirement pooled was account about Mark s two et, invested -Sec and-a ond in -hal bo Quarter f th tim stocks es 2013 the and median ” (September bond ba s. lance They). across are Avail classifi aal ble l parti ed at in cipa to two nts at year-end f perce publications ntage produce larger dollar increases (or decreases) when compounded on a larger asset base. each subsequent year through year-end 2011. References 2011 EBRI/ICI 401(k) database -10 .......................................................................................................................................................... 14 ? Mathe >5 to 10 w Greenwald -6.0, President, Greenw 10.8120.1 a 4.5 ld & Associ 42.0 6.0 ates. 17.2 12.8244.4 25.4 36.2 40.6 CHECK OUT EBRI’S WEB SITE! increased slightly in 2011 after two years of strong growth following the market turmoil of 2008, while the Russell 2000 Schrass 2012. surveys, studies, litigation, legislation and regulation affecting employee benefit plans, while responding to that question in 4% their survey was 19 in 2012. PLANSPONSOR Magazine’s 2012 Defined Contribution Survey of EBRI maintains and analyz 5% es the most comprehensive database of 401(k) 5% -type programs in the the aver www.ici age .aorg ccount /info/ret_13_q balance of 2_data.xl $58,991 asm ong participants | in the entire EBRI/ICI 401(k) database. The median 401(k) subcategor 201ies: 1. target-date funds and non–target-date balanced funds. 8%A target-date fund typically rebalances its 30s All -31.3 87.4 27.9 8.8 79.1 15.7 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. b EBRI’s Blog supplements our regular publications S&P 500 , offering commentary on questions Endnotes ...................................................................................................................... | ...................................... 15 Index experienced worl a sli d. gIts co ht decline mputer in 2simul 011 (Fi ation gure analy 7). Th se e sdeclin on So e cial in st Secu ock market rity reform valu es and retireme in 2008 also nt pull income a ed 401(k) dequacy 5,930 plan ? sponsors Neil Howe indicated , President of LifeCourse As that a median of 16 fund opti sociates. ons were offered (an average of 17.6), while a median of 4 (an 4 a >2 to 5 -23.2 131.9 34.6 11.8 168.2 28.0 13% 11% 10% account All told, from balan year-en ce amon d g 20 th 07 e consistent through yepar ar-tend icipants 2011, was the$42, average 082 at acco year-en unt balanc d 2011, e aabout mong tth wo-a e gro ndu -a-h p ofa lf consiste times tnt he portfolioEquities include equity funds, company stock, and the equity portion of balanced funds. to become less focused on growth and more focused on income as it approaches and passes the target date Account balan -20 ces are net of unpaid loan balances. received from news reporters | , policymakers, and others. EBRI Fundamentals of Employee 12, 13 >5 to 10 -30.2 100.8 30.4 c 10.6 102.1 19.2 are unique. account b balances lower, although diversified portfolios and ongoing contributions helped offset the impact. The 17% average Morning ? Younger of star 4.7) Lifecycle were partic actually ipants Allocaheld or tion thos by Inde e participants. w x. ith Chicago, smalle r initia IL: Morning l balance star s experie . nced higher percentage growth in account Participants include the 8.6 million 401(k) plan participants with account balances at the end of each year from 2007 through 2 | 011. partici EBRI’s website is easy to use and packe pants increased by more than 20 percent, rising fro Rm usd with useful information! Look for s$7 ell 20 6,5 0034 at year-end 2007 to $94,482 at year-end 2011 median accou ? Dallas Salisbury, nt balance of $16, CEO, Em 64Benefit Programs 9 of participants ployee Benefit Research offers a straightforward, b in the entire EBRI/ Institute. ICI a4 sic exp 01(k) lan dat ation of abase. emplo yee benefit programs in of the fund, which is usually referenced in the fund’s name. Non–target-date balanced funds include asset allocation or >10 to 20 -34.8 73.1 23.9 7.0 49.6 10.6 Consistent Participation in 401(k) Plans 5 c | The value of this percentage is lower than it would have been if it were merely reflecting employee turnover and retirement. average Row percentages may not add to 100 percent because of rounding. account balance among the consistent group of participants fell 34.8 percent between year-end 2007 and -30 17 40s balances com All pared with -36.7 olthe priv der participants ate and 67.4 public s or those ectors 20.5 wit . h The larger EBRI Data init 5.1 ial balances. book on Emplo 34.3 Theryee Benefits e are three 7.7 pr is a imary statistic factors al 17 Figures (Figures 4 and 5). This translates into a compound annual average growth rate of 5.4 percent over the four-year hybrid funds, in addition to lifestyle funds. Company 21% stock is equity in the 401(k) plan’s sponsor (the employer). | 24% Lifestyle funds these special features: maintain a predetermined risk level and generally use words such as “conservative,” “moderate,” or d ? Larry Z 23% impleman, Chairman of Principal Financial Group. About EBRI make 39 percent, s information freel or 8.6 million, of the 401(k y av) ailable to al participants Barwith cla l.y s C accoun apital U.Sts . at the end of 2007 in the EBRI/ICI 401(k) National Age group is based on the participant's age at year-end 2011. Bureau >2 to 5 of Economic Research -32.9 . 2010. 106.4 US Business 28.1 Cycle Expa 9.1 nsions and 93.7 Contractions. Ca 18.0 mbridge, MA: Any time a 401 401(k) account (k) plan sponsor changes ser balances varied with referen both c e work o v aice providers, ge and n emplo tenure y all part ee ben amon eicipants in the plan would be excluded from the consistent fit pr g the ogr co ams and nsistent work force-related issues. group of participants , as they do in the year-end 2008 (Figures 5 and 6), while the S&P 500 total return index fell 37.0 percent and the Russell 2000 Index fell d 18 that impact account balance -33.8 s: contributions, investment | returns, and withdrawal/loan activity. The percentage period. The median account balance (or midpoint, with half above and half below) among this consistent group also Aggregate Bond Index Money f e unds consist of those funds designed to maintain a stable share pric 5 e. Stable-value products, such as GICs >5 to 10 -35.9 86.6 24.7 7.4 60.3 12.5 “aggressive” in EBRI their assume name to s indicate a publith c e fu service re nd’s risk level. sponsi Lifestyle fund bility to make s g its finding enerally are inc s completely luded in the no accessi n–target- ble at www.ebri.org date Figure 1, Co The year-end 2007 EBRI/ICI 401(k) database represents 21.8 million 401(k) plan participants. nsistent Sample Was Older Than All Participants in EBRI/ICI 401(k) Database at Year-End 2011 ............... 4 database-40 had accounts at the en -37.0 d of each year from 2007| through 2011. These 8.6 million 401(k) participants make Nation al Bureau of Economic Research. Available at www.nber.org/cycles/cyclesmain.html sample. cross-sectional EBRI/ICI 401(k) database. Younger participants or those with shorter job tenure tended to have smaller 33.8• p ercent EBRI’s entire lib (Figure 7). Between rary of research publicat year-end 2008 and year-en ions starts at the m d 2011, the S&P a5in W 00 total eb page. Click on return index climbe EBRI d 48.6 per- 19 change >10 to 20 in average account -38.7 balance of con 69.5sistent partic 19.6ipants in th 4.9 eir 20s was 30.4 heavily influenced 6.9 by the relative f grew, rising 54 percent from $27,243 in 2007 to $42,082 |in 2011 (a 33% compound annual average growth rate of and other stable value funds, are reported as one category. The “other” category is the residual for other The year-end 2011 EBRI/ICI 401(k) database represents 24.0 million 401(k) plan participants. — so that all decisions that relate to employee benefits, whether made in Congress or bo $42, ard 082 rooms or balanced fund category. $40,390 Contact EBRI Publications, (202) 659-0670; fax publication orders to (202) 775-6312. up a group of consistent participants (or a longitudinal sample), which removes the effect of participants and plans >20 to 30 -36.6 53.2 17.1 3.7 18.0 4.2 account balances, while older participants or those with longer job tenure tended to have higher account balances. For Figure cent an2, Co d Issue Briefs thensistent Sam Russell 20and 00 p le In EBRI Notes de Had Lon x rose gby er T 54.6 for our in-depth and enure percent. Than A At ll Part |the ici same pants i nonpartisan periodicals. time, n EBRI the /ICI avera 40 ge 1(k ac )count Data base balance at Yamo ear-En ng d th 2e 011 .. 4 6 20 size of their contributions to their account balances and increased at a compound average rate of 41.0 percent 11.5 percent)families’ . homes, are based on the highest $33, qualit 385 y, most dependable information. EBRI’s Web site posts For the report -50 on the year-end 2007 EBRI/ICI25% 401(k) database, see VanDerhei et al., 2008. investments, EBRI was founded i such as real n estate 1978f to: unds. Subscriptions to The final cat EBRI egory Issue Bri , “unknown, efs are included ” consists as part of of fund EBRI s that membership, or as part of could not be identified. a 50s All -35.2 53.9 16.3 4.0 20.6 23% 4.8 Plan Sponsor Council of America. 2012. 55th Annual Survey | of Profit Sharing and 401(k) Plans: Reflecting 2011 enterin 18 g and leaving 24% the database. Initially, this group was demographically similar to the entire EBRI/ICI 401(k) $27,243 Orders/ example, in the consistent 2007 group, partici 2008 pants in their 2009 20s at year-en2010 d 2011 had an a2011 verage account bala 2012 nce of consistent GICs are insur group ance company of participants products that guarantee increased 89.3 percent a spe betwee cific rate n year-e of ret nd urn 20on 08 the and inve year-e stednd capital 2011over (Figthe ure life 4 an of d the 5). per ye all ar >2 to 5 resea between rch finding year-end -32.1 s, publi 2007 ca ations, nd year 96.7 an -en d dn 2011. ews 26.2 alert s. EBRI also exte 9.7 nds 85.0 its education and pu 16.6 blic service Figure 3, Distribution of 401(k) Account $199 annual sub Balances scription by Size of Account to | EBRI Not Balance es and EBRI Issue .................................................. Briefs. Change of Address: EBRI, .......... 6 • Visit EBRI’s blog, or subscribe to the EBRIef e-letter. 7 Plan Experience. Chicago, IL: Plan Sponsor Council of America. database at year-end 2007. However, by year-end 2011, these participants had grown older, accrued longer job Tenure refers to years at the >5 to 10 current employer and is gener -34.7 79.3 |ally 23.0 derived from date of hire 8.2 55.9 reported for the participant. Tenure 11.7 $19,392, ?com Conduct, and pared with an to encourage average $15, of 705 $1others to conduct, r 35,008 for participants esearch in their relating to e 60s (Figurm e ploy 5). ee benefit plans, whether contract. role to improving Ameri 1100 13th St. NW, Suite 878, Washington, cans’ financial knowledge through its a DC, 20005-4051, (202) 659-0670; fax number, ward-winning public service campaign Among the consistent group, there was a wide range of individual participant experience, often influenced by the Subscriptions Sources: Bloomberg, Barclays Global Investments, Frank Russell Company, and Standard & Poor's. >10 to 20 ® -37.5 63.3 | 17.5 4.8 25.6 5.9 Figure 4, 401(k) Account Balances Among 401(k) Participants Present from Year-End 2007 Through Year-End 2011 .... 7 tenures, and accumulated larger account balances compared with participants in the year-end 2011 cross section. will not reflec a t the years of participati governmental, private, or o (202) 775-6312 on in the 401(k) plan if the 401(k) plan was a therwise. ; e-mail: subscriptions@ebri.orgdded b Membe y the employer rship Information: at a later date Inquiries or if ? 401(k) Ch pa oosetoSave rticipants tenand d to the concentrate companio the n isite r accounts www.c in hoo equity setosav securiti e.org es. The asset allocation of the 8.6 million • Al EBRI’s reliable health and retirem l indexes are set to 100 in December 2006. ent surveys are just a click away through the topic boxes at relationships among the three factors mentioned above: contributions, investment returns, and withdrawal/loan | 19 >20 to 30 -36.5 51.0 14.2 2.8 12.5 3.0 19% 28% PLANSPONSOR Magazine, November 2012, 2012 Defined Contribution Survey: Looking to the Stars. Available at b 17% Other stable-value funds include synthetic GICs, which consist of a portfolio of fixed-income securities 22% “wrapped” with a The S&P 500 index consists of 500 stocks chosen f regarding or mar EBRI ket size, l membership an iquidity, and industry group r d/or con epresentati tributio on. ns to EBRI-ERF should be directed to EBRI | Figure there are restrictions on participating in 5, Aver ? Assemble an age Acco >30 unt d dissem Balances Amon -33.3inate inform the 4 g 4 01(k) plan immediately upon h 01 42.9 (ation on em k) Participants Presen 13.8 ployee bet nefits, b from Year ire. 3.1 y p -End 20 ublication or 11.8 07 Thro otherwise, to the ugh Year 2.8 -End 2011 401 c (k) plan participants in the consistent group was broadly similar to the asset allocation of the 24.0 million the top of the page. activity. As The R a usr se ellsult, 2000 index pa m rticipants easures the perwho formanc w e of e the 2,000 s re youn mger allest U or .S. c ha omd panife eswer (based on total years m of arket c teapi nure talizati e on) x iperi ncluded i ence n the d Rut ssel he l 3000 i larg ndex est (wperc hich tracks entage Changes in 401(k) Participan President Dallas ts’ Accou Salisbur nt Balances y at the above address, (202) 659-0670; e-mail: salisbury@ebri.org www.plansponsor.com/2012_Defined_Contribution_ | Survey.aspx guarantee (typically by an insurance company or a bank) to provide benefit payments according to the plan at book value. 60s All -34.2 43.6 10.0 -0.3 3.5 0.9 the 3,000 largest U.S. companies). Age and Tenure of Consistent Participants EBRI is sup by Age and 2007 ported b Tenure.............................................................................................................. y organizations from all industries and sectors that appreciate the value of 2008 2009 2010 ...................... 8 2011 general public, including interested organizations, both private and governmental. participants in the entire year-end 2011 EBRI/ICI 401(k) database. On average, about three-fifths of 401(k) 8 d increases in average account balance between year-end 20 | 07 and year-end 2011. For example, the average account Formerly the Lehm >2 to 5 an Brothers U.S. Aggr -31.5 egate Bond Index, the Bar 79.8 clays Capital U.S. Aggr 20.5 egate Bond Index i7.5 s composed of securi59.4 ties covering government and c 12.4 orporate For statistics indicating the higher propensity of withdrawals among participants in their 60s, see Holden and VanDerhei In any given year, the change in a participant’s account balance is the sum of three factors: • Need a number? Check out the EBRI Databook on Employee Benefits. 20 | unbiased, reliable information on emplo bonds, mortgage-backed securities, and asset-backed securities (rebalanced my onthl ee b y by menefits. arket capitalizati Vis on). The i it www.e ndex's total rb etur ri.o n cons rgi/about/join/ sts of price for more. ? Sponsor lectu 19% res, debates, roundtables, f 19% orums, and study groups on employee benefit plans. Editorial Board: >5 to 10 Dallas L. Salisbury -33.8 , publisher; Stephen Blakely 71.7 , editor18.8 . Any views expr5.5 essed in this publicat 42.5ion and those of th 9.3 e authors should At Some year-partici end recordkeepers 2007, pants’ the assets supplyi consiwere stent ng data inv grou ested were p wa iu n s n able equ similar iti to es, provide in eith age er to comp thro theugh lete part asset equity icipants allocati fun ind th s, on e the detail entire equity on EBRI certain portion /ICI data pooled of tar base. g asset et dat Foclasses r e Figure 6, Percent Change in Average Account Balances Among 401(k) Participants Present from 16% Year-End 2007 Russell balance 2000 of parIndex. ticipants Tac in otm heir a, 2 WA: 0s rose Frank 295.5 Russell percent Comp (a any. 41.0 percent 15% compound annual average growth rate) between appreciation/depreciation plus income as a percentage of the original investment. 2002. In addition, see The Vanguard Group 2013. not be ascribed to the officers, >10 to 20 trust -36.7 ees, members, or 55.8 other sponsors of the E 12.7 mployee 1.6 Benefit Research 12.8Institute, the EBRI Educ 3.1 ation and Source: Tabul ? Ne ations w from contr EBRibuti I/ICI Paons rticipant- by Dith rected e par Retirem ticipant ent Plan D or ata th Coe lle cti employ on Project. er or both; for one • or funds, Throu Instan more g the tly ge of h Year their equt e-m -End 201 ity clients. portion ail noti The 1 by offinal non–tar ? Acations of the latest EB ge EB aRI/ICI nd get Teda nure 401(k) te ................................................................................................ 8 balance database d fuRI data, nds, includ or es com only surveys, publications, and m pa plans ny stock. for which Betwat een least year-end 90 percent eetings 2007 of aall p nd lan example, 36 percent of the participants in the consistent sample were in their 20s or 30s in 2007, compared with the end of 2007 and the end of 2011 (Figures 5 and 6). Because younger participants’ account balances tended to be a Account balances are parti >20 to 30 cipant account bal ances -36.0 held in 401(k) plans at the 43.1 partici pants' current 8.4employers and are -1.3 net of pl an loans. -2.0 Retirement savings held in-0.5 plans at previous employers Research Fund, or their staffs. Nothing herein is to be construed as an attempt to aid or hinder the adoption of any pending legislation, regulation, 9 Consistent Sample in 2007 EBRI/ICI 401(k) Database in 2007 Consistent Sample in 2011 EBRI/ICI 401(k) Database in 2011 6 or rol At year-end 20 led over into IRAs are 11, 63 percent not included. of non–target-date balanced fund assets were assumed to be invested in equities (see S&P 500. New York, >30 NY: Standard -33.4 & Poor’s. 35.6 6.9 -2.1 -5.4 -1.4 37 assets perc could ent year-en and sem obe f the identified. d 20 2 inars by clicking on the “Notify Me” or 111 .8, millio the allocatio n participa n of n ts consisten in the etn partici tire database pant ba “RSS” buttons at the top of our ho lances (Figure to 1 )eq . u Thirty ities, -th edge ree d perc back ent from of the 42. m 9 partic eperce page. ipan nt ts of in or interpretative ? Total investment rule, or as legal, return acco on unting, account actuarial, o balan r other such prof ces, which de essional advice. pends on the ww w. performa ebri.org nce of financial markets and on b small The work of (Figure 5), th EBRI is eir contri m butions ade possible b produced y fundin significant g from perc its enta mge emgr bers and spo owth in their nsors, which includ account balances. es a broad Figure 7, Domestic Stock and Bond Market Indexes ............................................................................................... 10 The analysis is based on a sample of 8.6 million 401(k) plan participants with account balances at t he end of each year from 2007 through 2011. a All All -34.8 56.2 16.7 3.8 23.5 5.4 Source: EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Investment Company Institute, Quarterly Supplementary Data). The allocation to equities in target-date funds varies with the participants with more than 80 percent of their accounts in equities to 38.4 percent at year-end 2011. The the consistent sample were in their 40s in 2007, while 30 percent of participants in the entire database were in their range of pu the allocation blic, private, fo of assets in r-profit and an individual’s nonprof account; it orga annizations. For d more information go to www.ebri.org Note: The EBRI/ICI 401(k) database contains 21.8 million 401(k) plan participants at year-end 2007 and 24.0 million at year-end 2011. Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project EBRI Issue Brief is registered in the U.S. Patent and T There’s lo rademark ts more! Office. ISSN: 0887 ?137X/90 0887 ?137X/90 $ .50+.50 Figure 8, Average Asset Allocation of 401(k) Accounts by Participant Age ................................................................ 11 U.S. Department of Labor, Employee Benefits Security Administration. 2013. Private Pension Plan Bulletin, a The consistent sample consists of 8.6 million 401(k) plan participants with account balances at the end of each year from 2007 through 2011. funds’ target dates. For target-date funds, investors were assumed to be in a fund whose target date was nearest to their The analysis is based on a sample of 8.6 million 401(k) plan participants with account balances at the end of each year from 2 th 007 through 2011. 40s. percentage of consistent 401(k) participants without any allocation to equities remained unchanged at or www.asec.org Components may not add to 100 percent because of rounding. 1100 13 Street NW · Suite 878 b ? Withdrawals, borrowing, and loan repayments. Age and tenure groups are based on participant age and tenure at year-end 2011. Abstract of 2011 Form 5500 Annual Reports (Version 1.0). Washington, DC: U.S. Department of Labor, Figure 9, Asset Allocation to Equities Varied Widely Among Partici pants ................................................................... 12 Washington, DC 20005 11.8 percent. Visit EBRI on-line today: www.ebri.org (202) 659-0670 © 2013, Employee Benefit Research Institute ?Education and Research Fund. All rights reserved. ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Brie e e e e e e e efffffffff • October • October • October • October • October • October • October • October • October 20 20 20 20 20 20 20 20 2013 • No. 391 13 • No. 391 13 • No. 391 13 • No. 391 13 • No. 391 13 • No. 391 13 • No. 391 13 • No. 391 13 • No. 391 16 15 13 14 6 5 9 3 2 www.ebri.org www.choosetosave.org A monthl ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org y resea Issue Issue Issue Issue Issue Issue rch report f Brief Brief Brief Brief Brief Brief • • • • • • r October October October October October October om the EBRI Education and Re 2013 2013 2013 2013 2013 2013 • • • • • • No. No. No. No. No. No. 391 391 391 391 391 391 search Fund © 201 Employee Benefit Research Institute 11 12 10 4 8 7 Figure 8 Average Asset Allocation of 401(k) Accounts by Participant Age a Percentage of account balances, year-end 2007 and year-end 2011 Year-End 2007 d, e Target-Date Company Equity Non–Target-Date Bond Money GICs and Other b c e a Age group Funds Funds Balanced Funds Funds Funds Stable-Value Funds Stock Other Unknown Total 20s 48.4 10.6 6.8 5.7 5.5 6.4 13.5 1.8 1.2 100.0 30s 60.7 6.0 6.3 7.1 3.0 4.0 10.7 1.7 0.5 100.0 40s 56.7 5.2 7.3 8.0 3.5 6.0 11.0 1.8 0.5 100.0 50s 47.9 5.9 8.3 9.6 4.5 10.7 10.7 1.9 0.5 100.0 60s 39.8 5.4 8.5 11.8 5.5 17.6 9.0 1.9 0.4 100.0 b All consistent sample 49.5 5.5 7.9 9.5 4.3 10.7 10.4 1.8 0.5 100.0 f 2007 EBRI/ICI 401(k) database 48.2 7.4 8.0 8.3 4.2 10.6 10.6 2.1 0.7 100.0 Year-End 2011 d, e Target-Date Company Equity Non–Target-Date Bond Money GICs and Other b c e a Age group Funds Funds Balanced Funds Funds Funds Stable-Value Funds Stock Other Unknown Total 20s 37.0 28.6 6.9 7.8 3.1 4.5 9.0 1.2 2.0 100.0 30s 46.6 17.3 6.1 9.6 3.5 4.7 8.8 1.7 1.8 100.0 40s 46.9 12.6 5.8 10.7 4.2 6.5 9.7 2.2 1.4 100.0 50s 37.8 11.3 6.1 13.0 5.6 11.5 10.7 2.8 1.1 100.0 60s 30.8 10.5 6.0 15.5 7.8 17.4 8.7 2.4 0.9 100.0 b All consistent sample 39.3 12.0 6.0 12.6 5.6 11.0 9.8 2.4 1.2 100.0 g 2011 EBRI/ICI 401(k) database 39.2 13.3 7.2 11.9 4.4 10.8 8.2 3.1 1.9 100.0 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. a Row percentages may not add to 100 percent because of rounding. Percentages are dollar-weighted averages. b Age group is based on the participant's age at year-end 2011. Asset allocation by age group is among the consistent sample of 8.6 million 401(k) plan participants with account balances at the end of each year from 2007 through 2011. c A target-date fund typically rebalances its portfolio to become less focused on growth and more focused on income as it approaches and passes the target date of the fund, which is usually included in the fund’s name. d GICs are guaranteed investment contracts. e Not all participants are offered this investment option. f The year-end 2007 EBRI/ICI 401(k) database represents 21.8 million 401(k) plan participants. g The year-end 2011 EBRI/ICI 401(k) database represents 24.0 million 401(k) plan participants. Note: Funds include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested in the security indicated.