What Does Consistent Participation in 401(k) Plans Generate?

This Issue Brief presents recently available longitudinal data from the EBRI/ICI 401(k) database on consistent participation in a 401(k) plan, through year-end 2007. Looking at consistent participants in the EBRI/ICI 401(k) database over the eight-year period from 1999 to 2007, the average 401(k) account balance increased at an annual growth rate of 9.5 percent over the period, to $137,430 at year-end 2007. The median 401(k) account balance (half above, half below) increased at an annual growth rate of 15.2 percent over the period, to $76,946 at year-end 2007. Data for 2008 are currently being analyzed and are expected to be published later this year.

EBRI/ICI 401(K) DATABASE: 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 over time must examine how a consistent group of participants’ accounts have performed over the long term. Looking at consistent participants in the EBRI/ICI 401(k) database over the eight-year period from 1999 to 2007:

The average 401(k) account balance increased at an annual growth rate of 9.5 percent over the period, to $137,430 at year-end 2007.
The median 401(k) account balance (half above, half below) increased at an annual growth rate of 15.2 per-cent over the period, to $76,946 at year-end 2007.

ANALYSIS OF A CONSISTENT GROUP OF 401(K) PARTICIPANTS HIGHLIGHTS THE ACCUMULATION POTENTIAL OF 401(K) PLANS. At year-end 2007, the average account balance among consistent participants was double the average account balance among all participants in the EBRI/ICI 401(k) database. The consistent group’s median balance was more than four times larger than the median balance across all participants at year-end 2007.

YOUNGER PARTICIPANTS OR THOSE WITH SMALLER INITIAL BALANCES EXPERIENCED HIGHER GROWTH IN ACCOUNT BALANCES COMPARED WITH OLDER PARTICIPANTS OR THOSE WITH LARGER INITIAL BALANCES. Among the consistent group, individual participant experience is influenced by three primary factors that impact account balances: contributions, investment returns, and withdrawal and loan activity. For example, the average account balance of participants in their 20s was heavily influenced by the relative size of contributions to the account balances and increased at an average growth rate of 36.0 percent per year between year-end 1999 and year-end 2007.

401(K) PARTICIPANTS TEND TO CONCENTRATE THEIR ACCOUNTS IN EQUITY SECURITIES. The asset allocation of the 2.4 million 401(k) participants in the consistent group was broadly similar to the asset allocation of the 21.8 million participants in the entire year-end 2007 EBRI/ICI 401(k) database. On average, about two-thirds of 401(k) participants’ assets were invested in equities, through equity funds, the equity portion of balanced funds, and company stock.

The data in this report extend only to year-end 2007; the EBRI/ICI data for year-end 2008 are not available at this time, so the sharp market downturn of 2008 is not reflected in this report. Those data are currently being analyzed and are expected to be published later in 2009.

Jack Van The insurance separate acco rate when Profit Sharin consistent sa tenur De co added to erh gmple var / e mposition o 401k i is director a small Counci iedunt wi f o t l of e s, and ot th part h fr account. researc e consistent America. icipa her h at On n p 5 t t 1 ooled age, a sample h sthe oth e Employee t Annual investm pattern was si er h Surv an ents. Simila Be mil that d ey of , inv nefit ar to t is Profit estment also ob Resear he t rly Sh e,nure com ch Institut bon served in the cross- returns of a aring an d funp d 4 d e osit s a (EBRI). gi 01 rion of e any ven percentage pro (k) Plans: Sarah 4 sectional EBRI/ pool 01( Re k) ed Hpartici fl o account ecting 2 lden is sen pdants i Iuc CI prima 0e lar 0401( 7 ior n Pl the g r ily an er k) What Does Consistent Participation in 401(k) Plans Figure 1 14 7 director For the complete update fro of retirement and investor researc m the year-end h at t 2007 EBRI/ICI 401( he Investment Com k) databa pany Institute. se, see Holden, Van Luis Alonso is Derhei, Alonso, and Copeland, director of information year-en dollar database. invested in Experience increases (or d 19 You bo 99nds. Bal n .EBRI/ ger Chicago, parti decr ICI 401 ance c eases) when ipa IL: Pr d n (k) funds ts ge ofit Sh data are nerally base. co arin pool mpound tge For example, /4 ed ac nde 01k Co ded counts i to on a larg favor unciln of 31 eq veste America, er asset b perc uity f d i ent o u nn both d 20 s, fa se. the consiste while s 08 tocks . ol and der nt pa bo sample rticipants nds. Th ha ey ar wer d fie e ve or more classfew ified likely er ye into to ars of two Consistent Sample Was Older Than All Participants Generate? technology and research databases at EBRI. Special thanks to Elisabeth Buser of EBRI, who helped prepare the figures. 2008. tenure subcategor invest in in fi 1xed-income securi 999 ies in th , compare e yeard -en wities such as d th 3 208 0 7perce data bond nu t pdate: of pa fun rticipants in t li dfecycl s, guaran e funds and teed i he entir nvestment contra n e oEBRI/ICI nlifecycle bal 401cts (GICs) a (ak) database nced funds. A n (Figure d other lifecycle fun stable v 2). Eight da lue een in EBRI/ICI 401(k) Database at Year-End 2007 This Issue Brief was written with assistance from the Institute’s research and editorial staffs. Any views expressed VanDerhei, Jack. “The Impact of the Recent Financial CrFigure 4 isis on 401(k) Account Balances.” EBRI Issue Brief, no. 326. Percentage of participants by age, year-end 1999 and year-end 2007 By Ja ck VanDerhei, EBRI, Sarah Holden, ICI, and Luis Alonso, EBRI perce funds, typically r n or mon t ofe the bala e consistent sa nces to a y funds. n inmple creasingly had mor cone s than ervative port 20 yearfs of te olio as th nure e tar in g 199 et 9, as date of di th d 1e f 8 percent und, which of t h is usually e participin t anthse in the 15 in this report are those of the authors, and should not be ascribed to the officers, trustees, or other sponsors of Account balances are net of unpaid loan balances. Thus, unpaid loan balances are not included in any of the eight asset (Employee Benefit Research Institute, February 2 401(k) Account Balances 009). Available at www.ebri.org/pdf/briefspdf/EBRI_IB_2- Jul Jul July y y 20 20 2009 09 09 • • • No. 332-SR No. 332-SR No. 332-SR entire fund’s EBRI name /IC , approac I 401(kh ) es. Nonlifecyc database. le balanced funds include asset allocation or hybrid funds, in addition to lifestyle Age of Participant Figure 3 EBRI, EBRI-ERF, or their staffs. Neither EBRI nor EBRI-ERF l a obbies or takes positions on specific policy proposals. categories described. Among i 200 17 9_Crisis- ndividual 4 Im0 pct.pd 1(k) par f ticipants in the consistent sample, the allocation of account balances to equities varied 401(k) Account Balances Among 401(k) Participants Where the world turns for the facts 20s 30s 40s on U.S. employee benefits. 50s 60s funds. Company stock is equity in the plan’s sponsor (the employer). Money funds consist of those funds designed to EBRI invites comment Dion this research stribution of 401( . k) Account BFigure 7 alances, by Size of Account Balance b Introduction 18 The widely arou participa nd the avera nts who wer ge e o fofllowe 68 perc d over ent t for the consistent he eight-year perio grd oup as a tended whol to bee. older a Forty-five percent nd to have longer ten of particiu pre ants i by y ne the ar- Present From Year-End 1999 Through Year-End 2007 maintain a stable share price. Stable value products, such as guaranteed investment contracts (GICs) and other stable 16 Percentage of participants with account balances in specified ranges, 2007 Domestic Stock and Bond Market Indexes This system of classification does not consider the number 6% of distinct investment options presented to a given participant, 8% The EBRI/ICI 401(k) database, which is constructed from the administrative records of 401(k) plans, represents a large end consistent sa 2007, co 19mple mpared had mor with te h than e broad 80 base perc of ent of 401(k the ) ir ac partcounts icipants investe in the EBRI d in e/ICI quiti 40 es, 1(k while ) d 1 atabase. 0 perce Partici nt held no pants i equ n the ities at 1% 15% Retirement 38.9% and health benefits are at the heart of w a orkers’, employers’, and our nation’s value funds, are reported as one category. The “other” category is the residual for other investments, such as real Month-end level, December 1996 to June 2009 but rather the types of options presented. Preliminary research analyz1ing 1.4 million participants drawn from the 2000 20% Copyright Information: This report is copyrighted by the Employee Benefit Research Institute (EBRI) and by the cross-section or snapshot of 401(k) plans at the end of each year. As a cross-section of the entire population of 401(k) 20 consistent sa Endnotes all in What Does Consistent Participation in 401(k) Plans 2007 (Fimple, gure 9 by ). definition, had a minimum tenure of eight years (the length of time for the longitudinal analysis), economic security. Founded in 1978, EBRI is the most authoritative and objective source of estate funds. The final category, “unknown,” co 21% nsists of funds that could not be identified. 280 EBRI/ICI 401(k) database suggests that the sheer number of investment options presented does not influence participants. Investment Company Institute (ICI). It may be used without permission but citation of the sources is required. 24% plan partic ipants, the EBRI/ICI 401(k) database includes 401(k) participants who are young and individuals who are with 17 percent having between five and 10 years of tenure and 46 percent having between 10 and 20 years of tenure information on these critical, complex issues. Generate? On average, participants had 10.4 distinct options but, on average, chose only 2.5 (Holden and VanDerhei, 2001a). In 260 Stock market r 1 eturns posted in 2007 varied by the segment of the market held: the S&P 500 total return index marked new to their jobs, as well as older participants and thos EBRI/ICI 4e wh 01(k) D o hav atabase e been with their current employers for many years. (Fi For example, a gur e 2). In contrast, in t s of December he ent 31, 2007, th ire EBRI/ICI 4 e EBRI/ICI 401(k) database inclu 01(k) database in 2007, 38 ded st percent atistical information about 21.8 million of participants had five or fewer 36% By Ja Recommended C ck VanDerhie tation: i, EBR IJa , S cka V rah H anDeo rhe ldien , S, IC arahI, an Holde d Luis Alonso, EBRI n, and Luis Alonso, “What Does Consistent Participatio $137,430 n in addition, the preliminary analysis found that 401(k) participants are not naïve—that is, when given “n” options, they do not its fifth consecutive year of positive returns, while the Russell 2000 Index experienced a slight decline in 2007 after For e EBRI focus xample, at year- es solel end 2007, y on emplo 12 perceny t of ee 40 benefits research — no lobb 1(k) participants in the EBRI/ICI 4 y01(k ing )or advocacy database were in their 20s, years of tenure, 25 percent had between five and 10 years of tenure, and 21 percent had between 10 and 20 years of 401(k) plan pa 240 rticipants, in 56,232 employer-sponsored 401(k) plans, holding $1.425 trillion in assets. The 2007 EBRI/ICI References EBRI Employee Benefit Research I bnstitute Issue Brief (ISSN 0887 -137X) is published monthly by the Employee Benefit Research Institute, Average 38% Consistent sample S&P 500 401(k) Plans Generate?” EBRI Issue Brief, no. 332-SR, and ICI Perspective, Vol. 15, No. 1, July 2009. 31% divide their assets among all “n.” Indeed, less than 1 percent of participants followed a “1/n” asset allocation strategy. Profit rising over the four previous years (Figure 7). The three-year bear market of 2000–2002 pulled 401(k) account 1100 13th S EBRI stand t. NW, Suite 8s alone in em 78, Washington, Dpl Coyee ben , 20005-4051, efits rese at $300 pear r ych a ear or i s san inde included as pend part eof nt, nonprofit, and no a membership $122,037 subscription. npa P rtisan eriodi- while 8 percent were in their 60s (Figure 1); 19 percent of participants had two or fewer years of tenure at their current tenure. database covered 45 percent of the universe of 401(k) plan participants, 12 percent of plans, and 47 percent of 401(k) plan 30% Brady, Peter, Sarah Holden, and Erin Short. “The U.S. Retirement Market, 2008.” Investment Com 21. p 0any I % n21. stitute 1% 220 cals postage rate paid in Washington, DC, and additional mailing offices. P12 OSTMASTER: Send address changes to: EBRI Issue Brief, 1100 Sharing/401k C orga ouncil of America 2008 indicat nization. It analyzes and rep es that in 2007 orts resea, the rch data average without spin o number of inves r unde tment fund opt rlying agend ions available f a. All findingo sr , balances down. Diversified portfolios and ongoing contributions helped offset the impact of the stock market decline. EXEC UTIV E SUMMAR Y jobs, while 5 percent had more than 30 years of tenure (Figure 2). assets. See Holden, Van 13th St. NW, #878, Washi Derhei ngton,, D Alonso, and Copeland, 2008. C, 20005-4051. Copyright 2009 by Employee Benefit Research Institute. All rights reserved. No. 332-SR. Report availability: Fundamentals 18, This r no. 5 e(Ju port is ne 200 availa 9a). Av ble on th ailable I e at n tw ernet ww.ici.org at www /p.df eb /frim-v18n .org an5.p d ad t fwww .ici.org $103,751 whether on financial data, options, or trends, are revealing and reliable — the reason EBRI information is participant contributions was 18; Hewitt Associates, 2007, indicates an average number of investment options of 17 in 2007 By year The avera -en 200 gd e a 2007, ccount amon the consi g the stent sample consisten was also ol t group of der par,t on icipants average, fell 8. than 0 percent the 21.8 bet million partici ween year-enpdants 199in 9 a th ne ent d year-en ire d $93,841 the gold standard for private analysts and decision makers, government policymakers, the media, and 2 Although (although, an if premixed po nual updates rtfo of t lioh s are exclud e EBRI/ICIed, 401(k the average ) databasnumber o e providef s inve nap stment o shots of p40 tio1( ns o k) accou ffered is 12) nt bal.a Delo nces itte Co , assensulting t 12.1% EBRI/ICI 200 Because of these changes in the cross-secti 2 (Figur 40e 4), whi 1(k) database. 12.1%le the S For exam &P 500 total ple, h re ardly a oturn ind ns, comparing ny of ex fe th lle part 3 average accou 7.6 perc icipaent and n 35% ts in th nt balances acr te consiste he Russell nt gro oss different ye 2000u In p wer dex f e in t ear- ll 21.0 e hnd cross- eir 2 pe 0rce s an nt d ________. “Appendix: Additional Data on the U.S. Retirement Market, 2008.” Investment Company Institute 180 the public. 10.3% 30% $80,592 31% LLP, International Foundation, and the International Society of Certified Employee Benefit Specialists 2008 report that the 25% allocation, and loan activity across wide cross-sections of participants, the cross-sectional analysis is not well-suited to only 1 (Figure 4 7) perce . Ben tw t w eeen ye re in t ar-heei nd r 30s 2002 (Figure and year- 1). In t endh 2 e 0enti 07, th re EBRI e S&P 50 /ICI 4 0 total 01(k) re data turn base at y index cle im ar- be end d 8 2 200 .9 p 7, erce 12 n perc t anent of d the sectional snapshots can lead to false conclusions. For example, newly formed plans would tend to pull down the aver 8.4% age Fundamentals 18, no. 5A (June The Em 2009b). plo A yee vailable Benefi at t Research Institut www.ici.org/pe d f(EB /fmR -v18n I) was founded in 1978. Its 5_appendix.pdf mission is to This rep EBRI/ICI 401(K) D ort is being pub A 7.TABASE: 4% 7. lished 6% The simultan annual eously as an EBRI/ICI 401EBRI Issu (k) databas e Brief e update and re ICI Perspective port is based on and lar is avail ge crossa -s ble o ection ns both of 6.8% 160 6.2% addr average n essing t $66,660 umb he question o er of funds off $66,677 f t eh red by the 43 e impact of 6 401(k) participatio 5.5% plan s n inp onsors in their survey was 1 401(k) plans over time. Cross-sections cha 7 in 2007. nge in composition $65,936 5.contribute to 6% , to encourage, and to enhance the development of sound employee benefit acco partici Russell 2 unt balanc pants 000were i In e,de but wo x more n their uld tell us no tha 20s and 25 perc n doubl thing ab ed. Th ent e avera out co were in nsistently ge acc th 4.9eir 30 % ount balanc participating workers. Simila s. Thirty e -six among t percent o he cofnsistent gro the rly, consisten the aggreg up of t sample ate average partici w pant ere account s in t heir 4.4% organiza 401(k) plan tionparticipants. s’ Web sites Whereas t at www.ebri.org/publication he cross-sections cover part s/ib and icipa www.ici.org/researc nts with a wide range h/perspec of parti tive cipation experience in 4.3$61,341 % 3.9% EBRI explores the breadth of employee benefits and related issues 3.5% 3.2% 3.5% Who we are programs and sound public policy 2.9% through objective research and education. EBRI is the only over time because the selection of data providers and sample of plans 2.4% using a given provider vary from year to year 50s an increase Deloitte d Consu d 15 percent 124.l0 p ting LLP, Inte ercent were in bet t w rnational heen eir 60s, year Fou com -end np 2 dared with 24 percent ation, 002 an and th d year-en e Inte d rnationa 20an 07 d 8 percen (Fig l Society ure 2. 4). 1t, res % of Ce p1. ectively, in the rtifie 8% d Employee B entire data enefit base. balance would tend to be pulled down if a la 140 rge number of participants retire and roll over their account balances. 14% 12% 0.2% 12% 17 401(k) plans, EBRI studie meaningful an s the worl alysis of th d of health and retirement ben e potential for 401(k) participants to accumula efits — issues such a te retir s 40 ement 1(k)s, IRAs, retire assets over time ment 10% Barclays Capital U.S. private, nonprofit, nonpartisan, Washington, DC-based organization committed exclusively to Lifestyle funds maintain a predetermined risk level and ge 2 nerally use words such as “conservative,” “moderate,” or and because 401(k) participants join or leave plans. In addition, the database contains only the acco dunt balances held Specialists. 401(k) Benchmarking Survey: 2008 Edition. New York, NY: Deloitte Consulting LLP, 2008. Available at income adequacy, consumer-driven benefits, Social Security, tax treatment of both retirement and health Aggregate Bond Index must examine how a consistent group of public poli participants’ ac cy research and counts have education on performe econom d over ic securi the ty long term and emplo. Looking yee benefit is at sues. 120 3 “aggressive” in their name to indicate the Consis tent Participan Consistent Sample in 1999 ts Have Accumula EBRI/ICI 401(k) Database in 1999 fund’s risk level. ted Sizable Lifestyle fund 401(k Consistent Sample in 2007 ) Acco s ge unt Balance nerally are inc EBRI/ICI 401(k) Database in 2007 sluded in the no n-lifecycle balanced Year- About half of t end 2008 d raditional IRA assets resulted ata from the EBRI/ICI 401(k from rollovers ) database are curr from employer- ently bein spon g a sn ored retir alyzed an eme d a nt plans. See Brady, Hold re expected to be publis en, hed in the 401(k) plans at participants’ current employers. Retirement savings held in plans at previous employers or rolled www.iscebs.or benefits, cost g/pdf/401 manage %28k%29surv ment, worker a ey_08.pd nd f employer attitudes, policy reform proposals, and pension assets EBRI’s membership includes a cross-section of pension funds; businesses; trade associations; consistent participants in the EBRI/ICI 401(k) database over the eight-year period from 1999 to 2007: 13 fund catego The consistent ry. group’s account balances highlight the accumulation effect of ongo 3, 4 ing 401(k) participation. At year-end Table of Contents later this year. Source: EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. As Figure 7 highlights, stock market performance was sharply negative in 2008: The S&P 500 total and Short, 2009a. 100 and funding. There is wi labor un despread ions; health recog care prov nition that if employee be iders and insurers; government org nefits data exist, EBRI kno anizations; and service firms. ws it. over into individual retirement accounts (IRAs) are not included in the analysis. To explore the questions of the c Note: The EBRI/ICI 401(k) database contains 10.3 million 401(k) plan participants at year-end 1999 and 21.8 million at year-end Russell 2000 2007. 2007, one-fifth of the consistent group had more than $200,000 in their 401(k) accounts at their current employers, Hewitt Associates. “Trends and Experiences in 401(k) Plans, 2007.” Lincolnshire, IL: Hewitt Associates LLC, 2007. return index fell 37.0 percent and the Russell 2000 Index fell 33.8 percent. Year-to-date in 2009 (through June), stock Introduction The consistent sample consists of 2.4 million 401(k) plan participants with account balances at the end of each year from 1999 ................................................................................................................................................................ through 2007. 3 impact of ongoing participation in 401(k) plans or to understand how typical 401(k) plan participants have fared over a • The average 401(k) account balance increased at an annual growth rate of 9.5 percent over the period, to 18 80 4 GICs are insurance company products that guarantee a specific rate of return on the invested capital over the life of the Components may not add to 100 percent because of rounding. Account balances are net of unpaid loan balances. while another one-fifth had between EBRI’s work advances knowledge and unders $100,000 and $200,000 (Figure 3). In contrast, tanding of emplo in the broade yee benefits and their r EBRI/ICI 401(k) EBRI delivers a steady stream of invaluable research and analysis market retur Dec- ns have tur Jun- Dec- Jun- ned Dec- positive: Jun- Dec-The Jun- S&P Dec- 5 Jun- 00 tota SiDec- ze of A Jun- l ccre oun Dec- turn t Bal Jun- aindex nceDec- hJun- as posted a Dec- Jun- Dec- 3.2 percent Jun- Dec- Jun- incr Dec- ease, w Jun- Dec- hile th Jun-e given time period, it is important to analyze a group of consistent participants (a longitudinal sample). This consistent Consistent Participat $137,430 at y ion in 401(k) ear-end 2007. Plans .................................................................................................................... 3 96 97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 contract. importance to the nation’s economy among policymakers, the news media, and the public. It Holden, Sarah, and Jack VanDerhei. “Contribution Behavior of 401(k) Plan Participants During Bull and Bear Markets.” EBRI publications include in-depth coverage of key issues and trends; summaries of research database, fewer than one-tenth had accounts with more than $200,000 and one-tenth had accounts between $100,000 Russell 2000 Index moved up 2.6 percent. group of Source: parti Tabulatc ion ipants is s from EBR dra I/ICI Par w ticn ipant from th -Directed R e a etirnnual ement P cross-se lan Data Collecctions. tion Project. 5 Age and Tenure of Consistent Part does this b icipants...................................................................................... y conducting and publishing policy research, analysis, and special reports on ..................... 3 1999 2000 2001 2002 2003 2004 2005 2006 2007 The value of this percentage is lower than it would have been if it were merely reflecting employee turnover and retirement. What we do National Tax A finding ssociation Pro s and policy develo ceedings, Nin pments; timel ety-Sixth Ann yu factsheet al Confere s non hot topics; ce on Taxation, regula Novemb r up er da 13– tes on legi 15, 2003, slative and and $2 Note:00,0 The E00. BRI/IC I 401(k) database at year-end 2007 represents 21.8 million 401(k) plan participants; the median account balance in the database w as $18,942 at • The median 401(k) account balance (half above, half below) increased at an annual growth rate of 15.2 per- 19 employee benefits issues; holding educational briefings for EBRI members, congressional and Other stable value funds include synthetic GICs, Annual Percentage Change in Total Return Index which consist of a portfolio of fixed-income securities “wrapped” with a year-end 2007. The consistent sample represents the 2.4 million 401(k) plan participants w ith account balances at the end of each year from 1999 through 2007; The EBRI/ICI 401(k) database Consistent Partic regul ipants atory de Have Ac has adde velopment cd dat umulat s; comp a providers since 1999 ed Siz reable 401(k) Ac hensive refere and c nce resou o by unt Bal definition participants in thes ances rces o .................................................... n benefit programs an e plans would not be d workforce 5 Chicago, Illinois: 44–53. Wa shington, DC: National Tax Association, 2004. federal agency staff, and the news media; and sponsoring public opinion surveys on employee Thcent over e Decemb the er 2 perio 008 ICI d, to Pers $7pective/EBRI 6,946 at year-e Issue Brief nd 2007. reported year-end 2007 account balance, asset allocation, the median account balance among the consistent sample w as $76,946 at year-end 2007. guarantee (typi cally by an insurance company or a bank) to provide benefit payments according to the plan at book value. issues; and major surveys of public attitudes. included in the consistent sample. Moreover, any time a 401(k) plan sponsor changed service providers, all participants in the Changes Reflecting in 401(k their higher ) Partic avera ipants ge a’g Acc e ano d te unt Balanc nure, the co es............................................................................... nsistent group also had median and average account .................... balances 5 benefit issues. b EBRI’s Ed c ucation and Research Fund (EBRI-ERF) performs d the charitable, and loan activity results for tS&P 500 he EBRI/ICI Russell 2000 401(k) database, w Barclays Capital U.S. Aggregate Bond Index hich represents a large cross-section of 21.8 million EBRI meetings present and explore issues with thought leaders from all sectors. ________."Can 401(k) Accumulations educa Gen tiona erate S l, and scientif ignifica ic func nt Income tions of the Instit for Futureute. EBRI Retirees-ERF ?" Investment Company is a tax-exempt organization Institute plan would be excluded from the consistent sample. that w ere m %uch higher than the median and average account balances of the broader EBRI/ICI 401(k) database (Figure About the EBRI/ICI 401(k) Database 60 About the EBRI/ICI 20 401(k) Database....................................................................................................................... 10 All told, from 1999 through year-end 2007, the average account balance among the group of consistent participants 401(k) plan participants. This Issue Brief presents a longitudinal analysis—the analysis of 401(k) participants who Some recordkeepers supplyi EBRI regula ng data were u rly provides co nable to provide comp ngressional testimony lete asset allocati , and briefs p on detail on olicymake certain pooled asset classes rs, member organizations, supported by contributions Figure 2 and grants. Perspective 8, no. 3, and EBRI Issue Brief, no. 251 (November 2002). Available at www.ici.org/pdf/per08-03.pdf ANALYSIS OF A CONSISTENT GROUP OF 401(K) PARTICIPANTS HIGHLIGHTS THE ACCUMULATION POTENTIAL OF 4). At year-end 2007, the average 401(k) account balance of 47.3% the consistent group was $137,430, more than 8 double the 50 The EBRI/ICI Participant-Directed Retirement Plan Data Collection Project is the largest, most representative repository more than Sources and double Ty and the medi d, risi pe of ngData....................................................................................................... from $6 a on employe 6,660 at year- r benefits. end 1999 to $137,430 at year-end 2007 (Figure 4)............................ . This translates into 10 6 maintained accounts each year from 1999 through 2007—that was not included in the previous report. The for one or more of their clients. The final EBRI/ICI 401(k) database includes only plans for which at least 90 percent of all plan Consistent Sample Had Longer Tenure Than All Participants For the report on the year-end 1999 EBRI/ICI 401(k) database, see Holden and VanDerhei 2001b. and www.ebri.org/pdf/briefspdf/1102ib.pdf 401(K) PLANS. At year-end 2007, the average account balance among consistent participants was double the average average accou Median nt balance of $65,454 among participants in the entire EBRI/ICI 401(k) database. The median 401(k) of information 40 about EBR in I dividual 4 issues pre 01 ss rele (k) plaas n part es on ne icipanwsworthy developm t accounts. As of Decents, and i ember 31, 20 s a07, mong the mo the EBRI/ICI st widely qu 401(k) oted an annual average growth rate of 9.5 percent over the eight-year period. The median account balance (or midpoint, Inves longitu tment dina Options l analysis tracks ............................................................................................................. the acco EBRI Issue B unt balances o riefs are period f 2.icals providing exp 4 million 401(k) eplan rt evaluati partic ons of emplo ipants prese ................................ yee benefit issues and nt in the year-end 10 assets could be identified. 33.4% in EBRI/ICI 401(k) Database at Year-End 2007 account balance among all participants in the EBRI/ICI 401(k) database. The consistent group’s median balance was account balance amon sou 28.6% rces o g the consistent n employee be participants was $76, nefits by all media. 28.7%946 at year-end 2007, more than four times the median 7 trends, as well as critical analyses of employee benefit policies and proposals. EBRI Notes is a database included statistical Percentage of participants by years of tenure, year-end 1999 and year-end 2007 information about 21.8 million 401(k) plan participants, in 56,232 employer-sponsored with half abov 30 e and half below) among this consistent group also grew, rising 210 percent from $24,844 in 1999 to Tenure re Our 1999 EB fers RI/ICI to years at the 401(k) data current employer and is gener base and each subsequent y ally e derived from date of hire ar through 2007. reported for the participant. Tenure References .............................................................................................................................................................. 12 ________.“The Impact of Employer-Selected Investment Options on 401(k) Plan Participants’ Asset Allocations: 22.4% 21.3% more than fo ur times lar EBRI direct ger 21.0% th s an th membe e medi rs aan ba nd other constit lance across all uencie part s icipants at year to the informatio -end n they need, an 2007. d undertakes new account balance of $18,942 among monthly partici period pants in ical providing cu the entire EBrrent information on a variety RI/ICI 401(k) database. of employee benefit topics. 18.3% 18.4% 401(k) plans, holding $1.425 trillion in assets. The 2007 EBRI/ICI 401(k) database covered about 45 percent of the $76,946 in 2007 (an annual average growth rate of 15.2 percent). 20 will not reflect the years of participation in the 401(k) plan if the 401(k) plan was a Tenure of Participant (years) dded by the employer at a later date or if 15.8% Preliminary Findings." Working Paper prepared for the Center for Pension and Retirement Research (CPRR) Current Endnotes....................................................................................................................... research on an ongoi EBRI’s ng ba Pension Inv sis. estment Report provides detailed financial ........................................... information on the universe of 13 11.6% publications 9.7% 10.3% 10.9% 8.7 0–2 >2–5 8.4% >5–10 >10–20 >20–30 >30 universe of active 401(k) plan participants, 12 percent of plans, and 47 percent of 401(k) plan assets. The EBRI/ICI 7.0% there are restrictions on participating in the 401(k) plan immediately upon hire. 5.5% 10 defined benefit, defined contribution, and 401(k) plans. EBRI Fundamentals of Employee 5.2% Pension Policy EBRI maintains an Issues Conference, d analy at Miami zes University the most comp , Oxford, OH, rehensi Jun ve databa e 8–9, 200 se of 401(k) 1. Draft, May -type 20 prog 01a. rams in the YOUNGER PARTICIPANTS OR THOSE WITH SMALLER INITIAL BALANCES EXPERIENCED HIGHER GROWTH IN 401(k) account balances varied with both age and tenure amon4.1% g the co 4.3% nsistent group of 4.3%participants, as they do in the 2.5% Among the consistent group, there was a wide range of individual participant experience, often influenced by the project is unique because of its inclusion of data provided by a wide variety of plan recordkeepers and, therefore, 4% Benefit Programs offers a straightforward, basic explanation of employee benefit programs in 5% world. Its computer simula 6% tion analyses on Social Security reform and retirement income adequacy 0 Consistent Participation in 401(k) Plans ACCOUNT BALANCES COMPARED WITH OLDER PARTICIPANTS OR THOSE WITH LARGER INITIAL BALANCES. cross-sectional EBRI/ICI 401(k) database. Younger participants or those with shorter job tenure tended to have smaller 8 14% relationship among the three factors m -0.8%the priv entat ioned abov e and public s e: contributio ectors. The nEBRI Data s, investment r book on Emplo eturns, an yee Benefits d withdrawal is a an stat $76,946 d istic loan al -1.6% For a forecast of the potential impact of the 2008 market returns on 401(k) balances, see VanDerhei 2009. portrays the activity of -2.5% participants in -3.0% 401(k) plans of varying sizes—from very large corporations to small businesses— ________. “401(k are uni ) Plan Asset Allocatio que. n, Account Balances, and Loan Activity in 1999.” Investment Company Institute Figures 11% 14% -10 12% Among th About 23 e co percnsistent gro ent, or 2.4 million, of th up, individuae 401(k l participant ) partici exp per anits with ence is in accoun fluenced ts at by th three e end primary of 1999 in factor the EB s that im RI/ICI pact 401(k) account balances, while those whoreferen were o ce work o lder or ha n emplo d longer yee ben job t efit pr enur ogre ten ams and de work force-related issues. d to have higher account balanc www.ebri.es. For org $68,866 -9.1% activity. Participants who were younger or had fewer years of tenure experienced the largest increases in average with a variety of investment options. -11.9% Perspective 7, no. 1 (Investment Company Institute, January 2001b), and EBRI Issue Brief, no. 230 (Employee 5 Figure 1, Consistent Sampl 9 e Was Older Than All Participants in EBRI/ICI 401(k) Database at Year-End 2007......4 account balances: contributions, investment returns, and withdrawal and loan activity. For example, the average exampl database, e -20 ha with d the accounts cons at t isten hte en grou d o p, fp each artic ipants i year from n th 1 eir 9920s at 9 throu year-en gh 200d 20 7. T07 h hese 2.4 ad an million 40 average acco 1(k) partici unt balanc pants e of make For statistics indicating the higher propensity of withdrawals among participants in their 60 $58,071 s, see Holden and VanDerhei, account balance between year-end 1999 and year-end 2007. For example, the average account balance of participants EBRI makes information freely available to al -20.5% l Benefit Research Institute, February 2001b). Available at www.ici.org/pdf/per07-01.pdf and 23% -22.1% $51,927 Contact EBRI Publications, (202) 659-0670; fax publication21% orders to (202) 775-6312. account up a grou balan p of cconsistent par e of participan ticipants ts in their (or 20 a s was h longitue davily i inal sa nmple fluence ), which d by t r he e re moves the lative siz ef e of fect contri of partici butions to the pants and plans account $29, Figure 2, Consistent Sampl 116, com -30 pared with an average e Had Long of $1 er Tenure Than All Participants in 68,811 for participants in their 60s EBRI/ICI 401(k) (Figure 5). Database at Year-End Sources and Type of Data 2002. EBRI assumes a public service re 24% sponsibility to make its findings completely accessible at www.ebri.org in their 20s rose 1,073.6 percent (a 36.0 percent annual average growth rate) between the end of 1999 and the end of 27% $43,127 www.ebri.org/pdf/briefspdf/020 Subscriptions to 1ib.pdf EBRI Issue Briefs are included as part of EBRI membership, or as part of a -33.8% balances and increased at an average growth rate of 36.0 percent per year between year-end 1999 and year-end 2007. enterin Orders/ g 2007 and le ........................................................................................................................... aving the database. Initially, this group was demographically similar to the entire .................................... EBRI/ICI 401(k) 4 Several EBRI and ICI members provided records on active participants in 401(k) plans for which they kept records at -40 — so that all decisions that relate to employee benefits, whether made in Congress or board rooms or -37.0% 2007 (Figures 5 and 6). Because younger participants’ account balances tended to be small (Figure 5), contributions $199 annual subscription to EBRI Notes and EBRI Issue Briefs. Individual copies are available 10 $30,737 $30,727 14 At year-end 2007, 61 percent of balanced mutual fund assets were invested in equities (see Investment Company Institute, database at yfamilies’ ho ear-end 1999. me However, s, are based by on the highe year-end 2007 st qualit , these y, most depe participants ha nda d gro ble informatio wn older, accr n. EBRI’s Web ued longer job site posts $28,106 year-end 2007. These plan recordkeepers with prepay in m clude mut ent for $25 each ual fun (fd or printed compancopie ies, insuranc s). Change of Address: e companies, EBRI, 1100 13th St. and consulting firms. Figure 3, Dis -50 tribution of 401(k) Account Balances, by Size of Account Balance .......................................................6 produc Holden, $24,844 ed sign Sarahi, Jack Va ficant account nDerhei, Luis balance Alons growo th. In , and Crai contrast g Co , th pelan e average account balan d. “401(k) Plan Asset ce Allocation, Acc of older paro ticipants unt Balances or those , and Subscriptions Changes in 401(k) Participants’ Account Balances 401(K) PARTICIPANTS TEND TO CONCENTRATE THEIR ACCOUNTS IN EQUITY SECURITIES. The asset allocation of the all resea 1997 1998 rch finding 1999 s, publi 2000cations, an 2001 d n 2002ews alert 2003 s. EBRI also exte 2004 2005 nds its e 2006 25% 2007 ducation and pu 2008 Jun-09 blic service Quarterly Supplementary Data). NW, Suite 878, Washington, DC, 20005-4051, (202) 659-0670; fax number, (202) 775-6312; tenures, and accumulated larger account balances compared with the cross-section of participants in the entire year- Although the EBRI/ICI 401(k) project has collected data from 1996 through 2007, the universe of data providers varies 20% with Figure 4, 401(k) Ac longer tenures sho count B wed a more modest lances .............................................................................................. growth (Figure 6). For example, the average account balance .............................. of participants 7 Loan Activity in 2007.” Investment Company Institute Perspective 14, no. 3, and EBRI Issue Brief, no. 324 2.4 million 40role to improving Ameri 1(k) participants in th e-m e consi c aan il: s’ finan s subscriptions@ebri.o tent grou cial kn p wowle as broa r dge g dly sim thro Membe ugh its a ilar to t rship Information: hw e ard asset allocat -winning p Inquiries reg ion o ublic f the service 2a1rding EBRI .8 milli camon paign In any given year, the change in a participant’s account balance is the sum of three factors: 23% end 2007 Sources: Bloomberg, Barclays Global Investments, Frank Russell Company, and Standard & Poor's. EBRI/ICI 401(k) database. from year to year. In addition, the sample of plans using a given provider can change. Records were encrypted to ® 46% in 11 th(Investment eir 60s increased Company I 44.3 percent (a 4.7 nstitute and Em perc ploent annu yee Bene al fit avera Research Institut ge growth rat e, De e) bet cember ween year 2008). -en Availa d 1999 a ble at nd year-en d a Figure 5, Average Account Balance membership and/or contributions to EBRI-ERF s Among 401(k) Participants Present Fro should be directed to EBRI President/ASEC m Year-End 1999 Through Year-End ChoosetoSave and the companion site www.choosetosave.org For a description of the inves All indexes are set to 100 in December 1996. tment options, see page 10. participants in the entire year-end 2007 EBRI/ICI 401(k) database. On average, about two-thirds of 401(k) participants’ conceal t • New b he idcontributions by entity of employers and the participant or employees, the em but w ployer ere co or both; ded so that both could be tracked over multiple years. Chairman Dallas Salisbury at the above address, (202) 659-0670; e-mail: salisbury@ebri.org 2007. Inv The S&P 500 estment ret index consists of 500 stocks chosen for market size, liquidity, and industry group representation. urns, rather than annual contributions, generally account for most of the change in accounts with www.ici.org/pdf/per14-03.pdf and www.ebri.org/pdf/briefspdf/EBRI_IB_12a-2008.pdf 2007, by Age and Tenure..............................................................................................................................8 assets were c invested in equities, through equity funds, the equity portion of balanced funds, and company stock. Age and Tenure of Consistent Participants 19% The Russell 2000 Index measures the performance of the 2,000 smallest U.S. companies (based on total market capitalization) inc 21% luded in the Russell 3000 Index 9 12 Data provided for each participant include date of birth, from which an age group is assigned; date of hire, from which 1999 2000 2001 2002 2003 2004 2005 2006 2007 larger ba • Total lances. In a investm dditio ent ret n, u partici rn onp accou ants in nt bala their 60s te nces, w nhich d to have depen ad hi s on gher the propen performanc sity to make wit e of financia hdrawals. l markets and on For an analysi EBRI is sup (which tracks the 3,000 largest U.S. companies). s of contribution acti ported by organizations from all industries and sectors that appreciate the value of vity during the bear market of 2000–2002 using the cross-sectional EBRI/ICI 401(k) 18% Figure 6, Percentage Change in Average Account Balances Among 401(k) Participants Present From Year-End At year-end 1999, the consistent group was similar in age and job tenure to the participants in the entire EBRI/ICI Editorial Board: Dallas L. Salisbury, publisher; Stephen Blakely, editor. Any views expressed in this publication and those of the authors should d ___ a tenu _____. re ra “ nge is assigned; 401(k) Plan Asset Allocatio outstanding lo n, Account Ba an balance; lan fu cnd es, and s in the Loan parActivity in ticipant’s inves 2006tment po .” Investment Company rtfolios; and asset Insvalues titute Formerly the Lehman Brothers U.S. Aggregate Bond Index, the Barclays Capital U.S. Aggregate Bond Index is composed of securities covering government and databases, see unbiased, reliable information on emplo the allocation Holden and Va of assets in nDerhei, 2004. an individu The a al’s ac nalysis fi count; an yee b nds th enefits. d at overal Vis l 401(k) participants’ it www.ebri.org/about/join/ contribution rates were little for more. not be ascribed to the officers, trustees, members, or other sponsors of the Employee Benefit Research Institute, the EBRI Education and 1999 Through Year-End 2007, by Age and Tenure ......................................................................................8 corporate bonds, mortgage-backed securities, and asset-backed securities index (rebalanced monthly by market capitalization). The index's total return consists of database. For example, 41 percent of the participants in the consistent sample were in their 20s or 30s in 1999, 15 These changes in participant account balances also reflect changes in asset values during the eight-year time period attribute Resear Perspectiv dch Fund, to th eose fu 13, n or their nds. A o staffs. . 1, and Nothin n accou EB g her RI Issue nt bala ein is to be co Brie nce for e f, no. nstrued as an attem ach 308 part (Inv icipant estment Com pt to aid or is the sum o hinder pany Institute the adoption f the participant of a ann yd Em pending le ’s as ployee sets in al gislat Bene ion, rl f efit gulation, unds. price appreciation/depreciation plus income as a percentage of the original investment. 19% changed in 2000, 2001, and 2002 when compared to 1999. Whethe 17% r meas 17% ured in dollar amounts or percentage of salar 6 y Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. The data in this report extend only to year-end 2007; the EBRI/ICI data for year-end 2008 are not available at • Withdrawals, 13% borrowing, and loan repayments. compared with 42 percent of the 10.3 million participants in the entire database (Figure 1). Thirty-eight percent of the Figure 7, Domestic Stock or interpretative rule, or as legal, and Bond M accounting, actuarial, o arket Indexes r other such prof ............................................................................... essional advice. ..................9 a Plan (Figur Research bala e 7). A nces lt Insti h are construct ough tute, Au asset al gust 2007). Avai elocation vari d as the sum ed with of all lable at part agww e a icipa n w.ici.o d nma t ba ny part rg/ lances pdf/icipants hel per1 in the 3-01.p plan. d d f a an ra d nge of investments, the impact of Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of plan loans. Retirement savings held in plans at contributed, on average, 401(k) participants’ contribution behavior does not appear to have been materially affected by the this time, so the sharp market downturn of 2008 is not reflected in this report. Those data are currently being participants in the consistent sample were in their 40s in 1999, while 31 percent of participants in the entire database Figure 8, Average A previous employers or rolled over into IRAs are not included. sset Allocation of 401(k) Accounts, by Participant Age............................................................11 stock market performance showed through in 401(k) accounts because 401(k) plan participants tended to be heavily www.ebri.org/pdf/briefspdf/EBRI_IB_08-20073.pdf Consistent Sample in 1999 EBRI/ICI 401(k) Database in 1999 Consistent Sample in 2007 EBRI/ICI 401(k) Database in 2007 b The bear market in change in any i equities from 2000 through 20 ndividual participant’s account 02. balance is influenced by the magnitudes of these three factors The analysis is based on a sample of 2.4 million participants with account balances at the end of each year from 1999 through EBR analyzed a I Issue Brief n isd reare expected t gistered in the U.S. o Patent and T be publish radem ed later ark Office. this yea ISSN: 0887 r. -137X/90 0887 -137X/90 $ . 2007. 50+.50 In were vestment Options in their 40s. Twenty-o ne percent of the participants in the consistent sample were in their 50s or 60s, compared invested Figure 9, Asset Allocation to Equiti in equity securities. At year-en es Varied Wi d 2007, wh dely Am ether looking ong Parti at the cipants consistent gro ........................................................ up or the entire EBRI/ICI 40....... 1(k) 11 relative to the Source: EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. starting account balance. For example, a contribution of a given dollar amount produ 16 ces a larger growth th In the EBRI/ICI 401(k) database, investment options are grouped into eight broad categories. Equity funds consist of with 27 percent of participants in the EBRI/ICI 401(k) database overall. 10 13 Investment Company Institute. Quarterly Supplementa 1100 13 ry Data Street . Washin NW · Suite 878 gton, DC: Investment Company Institute. Note: The EBRI/ICI 401(k) database contains 10.3 million 401(k) plan participants at year-end 1999 and 21.8 million at year-end 2007. database, altogether, equity securities—equity funds, the equity portion of balanced funds, and company stock— For a forecast of the potential impact of the 2008 market returns on 401(k) balances, see VanDerhei, 2009. Washington, DC 20005 The consistent sample consists of 2.4 million 401(k) plan participants with account balances at the end of each year from 1999 through 2007. pooled investments primarily invested in stocks; these funds include equity mutual funds, bank collective trusts, life 11 © 2009, Employee Benefit Research Institute -Education and Research Fund. All rights reserved. represented about two-thirds of 401(k) plan participants’ assets (Figure 8). The asset allocation of participants in the Components may not add to 100 percent because of rounding. (202) 659-0670 www.ebri.org www.choosetosave.org ebri.org Issue Brief • July 2009 • No. 332-SR ebri.org Issue Brief • July 2009 • No. 332-SR ebri.org Issue Brief • July 2009 • No. 332-SR ebri.org Issue Brief • July 2009 • No. 332-SR ebri.org Issue Brief • July 2009 • No. 332-SR 11 9 4 8 7 A research rep 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 orte e e e e e e e from the EBRI ffffffff • July • July • July • July • July • July • July • July 20 20 20 20 20 20 20 2009 • 09 • 09 • 09 • 09 • 09 • 09 • 09 • Education and R No. 332-S No. 332-S No. 332-S No. 332-S No. 332-S No. 332-S No. 332-S No. 332-SR R R R R R R R esearch Fund © 2009 Employee Benefit Research Institute 14 12 10 13 5 6 2 3 <$10,000 $10,000–$20,000 >$20,000–$30,000 >$30,000–$40,000 >$40,000–$50,000 >$50,000–$60,000 >$60,000–$70,000 >$70,000–$80,000 >$80,000–$90,000 >$90,000–$100,000 >$100,000–$200,000 >$200,000 Figure 8 Figure 5 a b Average Asset Allocation of 401(k) Accounts, by Participant Age Average Account Balances Among 401(k) Participants Present From Year-End 1999 Through Year-End 2007, by Age and Tenure a b b Percentage of account balances, 2007 Age Group Tenure (years) 1999 2000 2001 2002 2003 2004 2005 2006 2007 20s All $2,481 $4,810 $7,079 $8,161 $12,455 $15,740 d $19,242 $24,305 $29,116 GICs and >5–10 1,727 3,754 5,803 7,245 11,580 15,105 18,573 23,754 28,617 Age 30s AllEquity Lifecycle 15,359 18,058Nonlifecycle 20,657 Bond 21,151 Money 31,828Other 40,346Stable Company 47,917 59,858 70,765 b c a >5–10 7,333 11,158 14,841 16,801 26,825 35,366 43,460 55,386 66,726 Group Funds Total Funds Balanced Funds Funds Funds Value Funds Stock Other Unknown >10–20 20,125 22,158 24,124 23,763 34,864 43,376 50,640 62,583 73,223 20s 48.4 10.6%% 6.8 5.7 5.5%% 6.4 13.5% 1.8 1.2%% 100 % % % 40s All 47,261 48,533 49,205 46,187 63,728 76,790 87,544 105,910 122,281 >5–10 16,273 20,867 24,742 26,202 39,526 50,557 60,893 76,010 90,238 30s 60.7 6.0 6.3 7.1 3.0 4.0 10.7 1.7 0.5 100 >10–20 43,719 44,875 45,658 42,796 59,492 71,859 82,133 99,520 115,005 40s 56.7 5.2 7.3 8.0 3.5 6.0 11.0 1.8 0.5 100 >20–30 77,852 77,074 75,244 68,683 91,493 107,838 120,155 143,369 163,572 50s 47.9 5.9 8.3 9.6 4.5 10.7 10.7 1.9 0.5 100 50s All 78,303 78,792 77,712 72,358 95,308 111,719 124,393 147,256 166,971 60s 39.8 5.4 8.5 11.8 5.5 17.6 9.0 1.9 0.4 100 >5–10 21,277 26,313 30,211 31,667 45,833 57,938 69,362 85,861 101,413 b >10–20 50,734 52,855 53,958 51,190 69,256 83,398 95,297 114,722 131,757 All Consistent Sample 49.5 5.5 7.9 9.5 4.3 10.7 10.4 1.8 0.5 100 >20–30 111,313 109,778 106,164 97,125 126,268 146,489 161,733 190,638 215,810 e EBRI/ICI 401(k) Database >30 104,166 102,726 99,299 91,706 118,220 135,024 145,825 168,766 186,955 48.2 7.4 8.0 8.3 4.2 10.6 10.6 2.1 0.7 100 60s All 117,005 112,865 108,259 98,689 122,662 135,807 142,431 158,603 168,811 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >5–10 23,446 28,839 32,906 34,448 48,150 59,989 70,136 83,938 95,089 a Row percentages may not add to 100 percent because of rounding. Percentages are dollar-weighted averages. >10–20 55,689 58,617 59,732 57,032 75,177 88,986 99,723 116,151 128,126 b >20–30 126,624 124,179 120,284 110,359 138,105 155,199 165,276 185,432 196,612 Age group is based on the participant's age at year-end 2007. Figure reports asset allocation by age group among the consistent sample of 2.4 million 401(k) plan participants with account balances at the end of each >30 172,288 160,618 150,057 133,836 161,942 172,970 174,399 188,893 197,276 year from 1999 through 2007. a c All All 66,660 66,677 65,936 61,341 80,592 93,841 103,751 122,037 137,430 A lifecycle, or target date, fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usually included in the fund’s name, approaches. Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. d GICs are guaranteed investment contracts. a The analysis is based on a sample of 2.4 million participants with account balances at the end of each year from 1999 through 2007. e b The year-end 2007 EBRI/ICI 401(k) database represents 21.8 million 401(k) participants. Age and tenure groups are based on participant age and tenure at year-end 2007. Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested in the security indicated. Figure 6 Figure 9 Percentage Change in Average Account Balances Among 401(k) Participants a b Present From Year-End 1999 Through Year-End 2007, by Age and Tenure Asset Allocation to Equities Varied Widely Among Participants b b Age Group Tenure (years) 1999–2000 2000–2001 2001–2002 2002–2003 2003–2004 2004–2005 a 2005–2006 2006–2007 1999–2007 b, c Asset allocation distribution at year-end 2007 of 401(k) participant account balance to equities by age; percentage of participants 20s All 93.9% 47.2% 15.3% 52.6% 26.4% 22.2% 26.3% 19.8% 1,073.6% 4.9% a >5–10 117.4 54.6 24.8 59.8 30.4 23.0 27.9 20.5 1,557.0 Age Percentage of Account Balance Invested in Equities 4.6% 30s All 17.6 14.4 2.4 50.5 26.8 18.8 24.9 18.2 360.7 d Group Zero 1–20 percent >20–40 percent >40–60 percent >60–80 percent >80 percent >5–10 52.2 33.0 13.2 59.7 31.8 22.9 27.4 20.5 809.9 2.4% >10–20 10.1 8.9 -1.5 46.7 24.4 16.7 23.6 17.0 263.8 % 20s 13.3% 5.7 4.9%% 9.5 15.9% 50.7 % 40s All 2.7 1.4 -6.1 38.0 20.5 14.0 21.0 15.5 158.7 30s >5–10 28.2 6.8 18.6 5.93.0 50.9 3.8 27.9 20.4 8.5 24.8 18.7 18.7 454.5 59.3 >10–20 2.6 1.7 -6.3 39.0 20.8 14.3 21.2 15.6 163.1 40s 7.2 4.0 4.9 9.9 22.5 51.6 >20–30 -1.0 -2.4 -8.7 33.2 17.9 11.4 19.3 14.1 110.1 50s 50s All 0.6 10.0 -1.4 -6.96.4 31.7 6.8 17.2 11.3 14.1 18.4 22.3 13.4 113.2 40.4 >5–10 23.7 14.8 4.8 44.7 26.4 19.7 23.8 18.1 376.6 60s 17.2 9.0 9.1 14.1 17.2 33.4 >10–20 4.2 2.1 -5.1 35.3 20.4 14.3 20.4 14.8 159.7 b >20–30 -1.4 -3.3 -8.5 30.0 16.0 10.4 17.9 13.2 93.9 All Consistent Sample 10.4 5.6 6.2 11.7 20.8 45.3 >30 -1.4 -3.3 -7.6 28.9 14.2 8.0 15.7 10.8 79.5 e EBRI/ICI 401(k) Database 13.2 3.8 5.3 11.2 23.0 43.4 60s All -3.5 -4.1 -8.8 24.3 10.7 4.9 11.4 6.4 44.3 >5–10 23.0 14.1 4.7 39.8 24.6 16.9 19.7 13.3 305.6 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >10–20 5.3 1.9 -4.5 31.8 18.4 12.1 16.5 10.3 130.1 a Equities include equity funds, company stock, and the equity portion of balanced funds. “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, >20–30 -1.9 -3.1 3.2% -8.3 25.1 12.4 6.5 12.2 6.0 55.3 and any pooled >30 investment produc -6.8 t primarily inves -6.6 ted in the secur -10.8 ity indicated. 21.0 6.8 0.8 8.3 4.4 14.5 2.6% a b All All 0.0 -1.1 -7.0 31.4 16.4 10.6 17.6 12.6 106.2 1.9% Participants include the 2.4 million 401(k) plan participants with account balances at the end of each year from 1999 through 2007. Asset allocation is as of year-end 2007. Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. c a Row percentages may not add to 100 percent because of rounding. The analysis is based on a sample of 2.4 million participants with account balances at the end of each year from 1999 through 2007. b d Age and tenure groups are based on participant age and tenure at year-end 2007. Age group is based on the participant's age at year-end 2007. e The year-end 2007 EBRI/ICI 401(k) database represents 21.8 million 401(k) participants.