The average 401(k) account balance of workers who participated consistently in a 401(k) plan from year-end 2007 to year-end 2013 increased significantly between 2012 and 2013, according to an updated annual study by the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI).

• The annual EBRI/ICI 401(k) database update report is based on large cross sections of 401(k) plan participants. The cross sections cover participants with a wide range of participation experience in 401(k) plans; therefore, meaningful analysis of the potential for 401(k) participants to accumulate retirement assets must examine how a consistent group of participants’ 401(k) accounts change over time.
• Two major insights emerge from looking at consistent participants in the EBRI/ICI 401(k) database over the six-year period from year-end 2007 to year-end 2013:

o The average 401(k) account balance fell 25.8 percent in 2008, and then rose from 2009 through year-end 2013. Overall, the average account balance increased at a compound annual average growth rate of 10.9 percent from 2007 to 2013, to $148,399 at year-end 2013.

o The median (midpoint) 401(k) account balance increased at a compound annual average growth rate of 15.8 per-cent over the period, to $75,359 at year-end 2013.

• Analysis of a consistent group of 401(k) participants highlights the impact of ongoing participation in 401(k) plans. At year-end 2013, the average account balance among consistent participants was more than twice 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 the median balance across all participants at year-end 2013.
• Younger 401(k) participants or those with smaller initial balances experienced higher percentage growth in account balances compared with older participants or those with larger initial balances. Three primary factors affect account balances: contributions, investment returns, and withdrawal/loan activity. The percentage change in average account balance of participants in their 20s was heavily influenced by the relative size of their contributions to their account balances and increased at a compound average growth rate of 46.6 percent per year between year-end 2007 and year-end 2013.
• 401(k) participants tend to concentrate their accounts in equity securities. The asset allocation of the 4.2 million 401(k) plan participants in the consistent group was broadly similar to the asset allocation of the 26.4 mil-lion participants in the entire year-end 2013 EBRI/ICI 401(k) database. On average at year-end 2013, about two-thirds 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. Younger 401(k) participants tend to have higher concentrations in equities than older 401(k) participants.
• Equity holdings by consistent 401(k) participants increased slightly among younger participants and decreased slightly for older participants. High allocations to equities dropped for both groups from 2007 to 2013.
• More consistent 401(k) plan participants held target-date funds at year-end 2013 than at year-end 2007, on net; many of those with target-date funds held all of their 401(k) account in target-date funds.

F Figu igur re 11 e 5 Investment Co zero, a Thes At year- average accou References spectrum, co The tenur e per nd end e co c 61. ent 2 n 7 007, mposition o s a n perc mpany I istent 40 ge c t ba 9.0 ent sticki han lance bet p n ges e 1(k stitut rce f t i )h n 4 n ng partici w e consistent e. t of een 0 with Quart 1 consiste ( year k) p zero ants i parti erly S -en h n nt 4 sample a cd o their ipant u 2007 a ldin ppl 01ementa gs in account ( 6 k) parti 0lso w s mov n bot d year- ry as c h bala ipan e 2 Data d similar to t 007 en ances also ts w d . an ay Washin had 2013. from d th 20 heir e refl For example, t e te 13. Movem gton, DC: high ect c nure n conce tire com h acco an Inves en ges in nt tr punt h towar osition o ations in e aver tment Com balanc asset val dage ac tar f equit 4 e i g 0n et 1 p u v (k count a -date ies: 25. es durin ested i n) partici y Institute. f balanc und n 8 g tar p th perc an use g e six- e ts in et-dat ent of of was e Jack VanDerhei is director of Research at the Employee Benefit Research Institute (EBRI). Sarah Holden is senior What Does Consistent Participation in 401(k) Plans 13 26 7 401(k) AcY co ou un nt B ger a l4 a0n 1c (k e)s A Pa m rto ic nig p C an otn ss H isa te vn et H 401( ighk) P er C ao rtn ic cie pn atn ra tst ifo ro nm s in 200 Eq 7 u Tih tie rosugh 2013 Data from the This system of classification d ICI Survey of Do efined Contribution Plan Record es not consider the number of distinct investment options keepers find that DC plan pa presented to a rticipants generally stayed the given participant, 401 high funds, the year consistent 4 year period (Fi Endnotes (k) pa est amon essenti -erticip nd 0 1 200 g ally the same ( g ants in t k) partic partici ure 8). Altho 7 EBp RI/ICI heir ants ipan 2 in th ts in th share as at 40 u 0gh s rose 8 1(k asset a eir )eir 40s, data 93. 60s year-en llo b 50s, or 60s, an 7 ahad mor cation se. perce For d nt vari 2013, exam e (a th ed with age, 46. ad lo but nple, 6 8percent 0 west amon small 30 perce percen mov an n com t o d many e g those in fments to or t of t the poun ir acco hd pe co an art thei icipants hel nual nsistent sampl unt away from suc r 20s. investe average gro dd a i ra n e e h nge h w q ad a tuities h of rate) full five or invest allocat at year bet fem w w ion ents, e -en een th r d e director of Retirement and Investor Research at the InveFigure 1 stment Company Institute (ICI). Luis Alonso is director of Aon Hewitt. 2014. 2014 Universe Benchmarks. Lincolnshire, IL: Aon Hewitt. Figures Generate? Changes in 401(k) Account Balances, 2007–2013 Investment Company Institute. 2015. “The U.S. Retirem Figure ent Market, 3 First Quarter 2015” (June). Available at Asset allocA at ver ion di age s40 tri1(k but)i b on of alan 4 c01(k e for) c p ons artiic sitp ent ant 401( acckoun ) pa t b rtial cianc pante sto equities but rather the t course through the financial cr ypes of options presented. Pre isis. The vast Consistent majo liminary rese Sample W rity of DC plan arch analy as Older Than participan zing 1. ts co 4 million participants drawn fr Participants ntinued contributing and on om the 2000 ly a negligible share years of t end s varied by 201 tock market 3, com of 20e 07 parti p nur ar aperforma ed nd e in cipant with t 2 he end 007, age. Yo 3nce 3 co .5 of h p mpared 201 a ercent unger d an 3 (F im at year cons w igur pact ith es 5 istent 401(k) parti 38 on thes -en pan ed rcent d 6). 200 e ba of 7. Bec p la Th nces articipants a ose fi us cipants moved away e youn because, gures in t ger inc participants’ ac he e in large part, 401 lude ntire 11 .2 EBRI from perc a /ICI ent of count 100 percent (k) 40plan participants’ consiste 1(k balanc ) dae al tabase snt 4 tended to be location, on 01(F (k) igur bala e n nces 2 e)t, . Information Technology and Researc h Databases at EBRI. Steven Bass is an associate economist at ICI. This Issue Brief Figure 1, Consistent Sample Was Older Than Participants in the EBRI/ICI 401(k) Database at Year-End 2013 .............. 5 by age and tenure, year-end 2007–2013 Distribution by age, of perc 401(k) A entag e of ccou part nt icBalances by ipants, year-end 200 Size 7 and y of Acco ear-end 2013 unt Balance Analyzin www.ici.org/r g the group of esearch/stat consistent 4 s/retireme 01(k) participants nt/ret_15_q1 at year-end 2013, the data show that virtually none, on net, 1 in the EBRI/ICI 401(k) Database at Year-End 2013 Barclays Capital U.S. Aggregate Bond Index. San Francisco, CA: Barclays Global Investors. EBRI/ICI 401(k By Jack Va took withdrawa nDerhei, E )ls; in addition, database sug BRI; Sarah Holden, ICI; gests that the a minority of participants rebalanced either sheer number of in Luis A vestment lonso, EBR options presented does not influence participants. their contribu I; and Steven Bass, ICI tion investment allocations or their tende Eightee while smaller partic ip d ol to an n der co (Fi perc be ts in th gurwei ent of e 5 nsistent e g ), t ihte r 60 the heir d4 s wh to con 0 con 1 w (k ard e o h s t)ributions istent sample partici ad 10 quitp ies. A 0 ants edged pro perc d ltogeth had ent of uced more si the er, at towar gnif i tha r ac ic year-e d ant percenta a n 2 count inv 10 0 years n 0 d 20 perc ested in 13, of t ent ge gro wh e allocation to nure ether w equities at th in in looki 2 th 007, eir acco t n arget-date g at year-en as di the unt d 16 d cons ba 20 f pulances. In e 13 n istent gro rd c, compare ent of s, on net. th con ue p o d Fo twi rast, the r the r th was written with assistance For example, as of Decembefr r 31, 2013, th om the Instit e EBRI/ICI 401(k) database inc ute’s research and editorial sltuded stat affs. Any v istical information on 26.4 million 4 iews expressed in this report are 01(k) September 2015 • No. 418 Age T enure Percentage of participants with account Percentage of participants Percentage by of a age, year-end 2007 and ccount balance invested in eyear-end quities at ye2013 ar-end 2007 16 moved to or from a 100 percent target-date funds allocation—9.0 percent of this group at year-end 2007 and 9.2 per- On average, pa account investment allocation rticipants have s. See Holden and Schr 10.4 distinct options but, on ass 20 average, choose only 2.5 (See Holden and Va 15a for DC plan participants’ annual activities between 200 nDerhei 2001). 8 and In entire participants in the entir average accou exampl 12.5 percent EBRI e, 18.9 perc /IC fully inv I 40 nt ba 1(k ent o lance of ested i ) data ef EBRI/ICI cobase, equities— n nsistent 401(k older equiti partic 401(k es at y ipa ) e database. )n ar-e equity ts, or those partici nd 20 fu pants i nds, t 07.wi Althou n h th the e longer t eiq r 2 gh t uity 0s ha h porti e enures—both financi d 1 o0 n of 0 percent al cr target-date f isis of w that occurr of the hich ten unds, t ir 401 ded e(k dh to ) account durin e equity have g this per larger portion invesited i od of n those of the a plan participanu ts, in 72,676 employer-spo thors, and should not be ns ascribed to ored 401(k) plans, holding $1.912 trillio the officers, trustees, or other n in assets (see Hold sponsors of EBRI, en et al. 2014b EBRI-ERF, or ). their Figure 2, Consistent Sam Group p (yle ear Had Lon s) 2007 ger Tenure 2008 Than Pa 2009 rticipants 2010 in the EBRI 2011 /ICI 401(k 2012 ) Database 2013 at Year-End balances in specified ranges, year-end 2013 1 to 20 >20 to 40 >40 to 60 >60 to 80 >80 Morningstar Lifecycle Allocation Index. Chicago: Morningstar. Figure 8 Age of Participant Bloomberg Data. New York: Bloomber 10 g L.P. cent at year-end 2013 were 100 percent invested in target-date funds (Figure 17). However, even though there was addition, the preliminary analy 2014. Analysis Where the world turns for the facts of Department of Labor Form 5500 data fi sis found that 401(k) particip ndants are not n s that on U.S. employee benefits. the perc aentage of 401( ive—that is, when given k) plan sponsors making empl n options, they do not oyer non-tar may have balanc target-date fu es at t get-dat infh lu nds at y e begi e ba encelance d nnin partici ear-en d g o fup fnds, d 2013, com the ants’ study and com allocati $3,235 peri p on to e ared od tha pany stock—r $4,with 575 qn uit youn 26.7 perc ies, $10,076 some of ger work epresented about two ent at this $15,167 ers or ye movement ma ar-en those wit $17, d 20 886 -thir 07 (Fig h sho ds y have sim $23, of rter ten ure 14 859 401(ku ). p )res— $32, ly pla Atbeen the 145 n part showed more norma oth icipa er ents lnd ’ of as s the ets staffs. Neither Using National Compensation Surv EBRI nor EBRI-ERF lobbies ey data an or takes positi d historical rela Fons igur tionships and t e 16 on specific policy rends evident i proposals. EBRI invi n the Form 550 tes comment 0 data, EBRI and ICI on this 20s All percent percent percent percent percent 2013 .......................................................................................................................... Age Group Zero .............................. 5 20s 30s 40s 50s 60s Domestic Stock and Bond Market Indexes The December 2014 EBRI Issue Brief 11 and ICI Resear 17 ch Perspective reported year-end 2013 account balance, asset As expecte nearly no nd e, t t change, he consistent some partici particip pants ants di wh d o w rea ellocate re folloth wed ov eir assets: 2. er the six-year 8 percent o perifo co d tended to nsistent 4 be older a 01(k) partici nd to pants have moved divide their ass contributions edged back a ets among all bit during the fi n. Indeed, less than 1 p 3,006 nancial market cr 4,475 ercent 10,of participants followed a isis and recent r 228 15,507 ecession; still 18,459 1/n , about eight in asset allocation 24,734 33,411 strategy. Plan 10 401(k) plan (Fi reallocation age s modes gur p e 9, t ectrum, pe lo rce as wntage er pa consistent partic nel gro ipants ).wth The 40 a in accou 1(k pproach asset allocati ) partic nt s ed reti ip ize an ( ts in th rement. on of Figure partic eir 6) . 60s For ex ipamoved to nts in t ample, he co ward a 100 percent the average acco nsistent sample varied unt concentr balanc with ation e of 401(k participant in target ) partici age, -datp a e ants 20s Changes in Ze 13.3ro Alloca2. tion to T 0 arg 2.e 4t-Date Funds 4.6 Among 16.4 61.3 research. estimate the number of active 401(k) participants to be ab >5 to 10 out 53 million in 2013 and the number of 401(k) plans to be about National Bureau of Economic Research. 2010. U.S. Business Cycle Expansions and Contractions. Cambridge, MA: 39.3% BrightScope and Investment Company Institute. 2014. The BrightScope/ICI Defined Contribution Plan Profile: A Close 4% allocation, and loan activity results for the EBRI/ICI 401(k) database, which consists of a large cross section of 26.4 longer away from the 100 tenure by year perc -en ent a d 2013, llocation to compar something less, ed with the broa3.0 der perc baseent m of 401(k oved to ) partici a 100 pa nts in t percent allo he EBR caItion, an /ICI 40d 1(k 6.2 ) per- 8% 30s 21,808 8.7 18,355 2.4 31,097 41,094 3.5 44,723 7.3 55,90319.2 72,478 58.9 sponsors made contributions to their plans in 2012 (s Sponsor Council of America 2014 indicates th Retirement 30s and health benefits are at the heart of w All at in 2013, the ee BrightScope and In average numb orker er of investment fund vestment Company I s’, employe 11% rs’, and our nation’s n options available for stitute 2014). p in funds, Figure attern that their 60s on 3, Distribution of 401(k) Account net: in also is ob c 9.0 reased percent served in the 45.0 perce of consistent nt (a 6.4 cross- Balances 4 01(k sectional EBRI/ICI perc)ent comp partici by Size of Account paound nts in t 4 annu 01 h( eir k)al a 60 dat Balance v s had 10 a erage gro base. Yo .................................................. 0 per ung wthc rate) er pa ent of rtbetween year th icipants ge eir 401(knerally ) account -end ten 2007 a .......... 7 ded to nd 518,000 (see note 2 in Holden et al. 2014b; a 1 Consistent 401( nd U.S. Department k) Participants Bet of Labor ween 2015). At year-end 2013, 401( 2007 and 2013 k) plan assets were 14% National Bureau of Economic Research. Available at www.nber.org/cycles/cyclesmain.html Month-end level, December 2006 to December 2014 Look at 401(k) Plans. San Diego, CA: BrightScope and Washington, DC: Investment Company Institute. Available at Figure 10 About the EBRI/ICI Database Figure 12 40s 7.5 2.9 4.1 8.2 25.0 52.1 million 401(k) plan participants. This paper presents a longitudinal analysis—the analysis of 401(k) participants who database. What Does Consistent Participation in 401(k) Plans cent stuck Part withicipants a 100 percent allocatio in the consistent sa 11,433 n tomple, target 11,711 by -date defin fund 23, ition 095s , ha in both 2 d a 32,561 mi007 nimum te an 36,945 d 201 nure 3. of si 47,835 In otx years her words, 63,484 in 20 nearly 70 13 (the len percent gth of economic security. Founded in 1978, EBRI is the most authoritative and objective source of participant contributions was 19 among the >5 to 10 Percentage of c 613 plans suons rveyed; Aon Hewitt 2014 indicates an a istent 401(k) participants verage number of 20 favor e year-en invested qd uity in 20 tar 13 fug . Investment nds an et-date d tar funds g r ete at year -date turns, rath funds, -ende 2 r w013, than a hile o compar lnnual der parti c ed o w ntributio cipith ants 7.7 were n p s, generally er cmore like ent at year accou ly to -end n invest in t for 2007. most of fixed-income the change i securi n ties 180 $4.2 trillion (see Investment Company Institute 2015). The 2013 EBRI/ICI database covers about half of the universe of 1 14 www.ici.org/pdf/ppr_1425% _dcplan_profile_401k.pdf EBRI/ICI 401(k) Database 50s Changes in 401(k Cha ) Par nge ti 8.1 ci s in Ze pants' ro A A 4. lllloc o 3caattio ion to E n B a trcla o 5. E 8ys q quitie Ca uip tiites B al sU. A 14.6 Sm et . Aong w ggeen regat 2007 and e 25.9 2013 41.3 24% maintaine For discussion d accounts each of how U.S. households’ year from 35, 2 224 00 inve 7 throu stments chang 27,073 gh 2013 42, —that wa 615 e over the life cycle, 53,895 s not inclu 57,066 de see Sabelhaus, Bogdan, and Sc d in the pr 69,467 evious r 88,298 eport. Thehrass 2 longitudina 008. l time for of consistent The Figure EBRI 4, Co the /ICI lo nsistent 4 401 Participa ngitu (k) pa dinal 0n1 rticipants with t-Dir ana (k) Particip e lysis), with cted Retir an the ts A 2 em 8 iccumulate re 40 perce nt P 1(k lan n )t havi ac Data Si cou gnificant nn Collect gts fully betw Ba ion Proj een invest lanc fives e an ect is the la ed ................................................................... 7 in tar d 10 year getrgest, most repr -date f s, 42 unds perc at y ent having e esentative ar-en b d 20 etwe 07 repository e n 1 were 0 information on these critical, complex issues. by age, year-end 2007 and year-end 2013 >10 to 20 Suggeste Plan Sponsor Council investment options in 2013; 1 d citation: of VanD America. 201 erhei, 4 on average Jack, Sa 4. 57 when premixed portfo th An rah Holden, nual Su Luis Alonso, rvey of lios are counted as one Profitan Sharin d Stev gen anBass. 20 d 401(k option )15. Plans: R . Deloitte Consulting LLP, “What eflecti Does Consiste ng 2013 Plan nt such as accounts with Generate? Changes i bond flarger unds, mon balances. In a ey funds, or dditio guar nn , antee 401(k) Account Balances, 2007–2013 partici d inv pants estment in their contra 60s tend to have a cts (GICs) and o higher ther stable-va propensity to make lue funds. The decline 401(k) plan participants, nearly 15 percent of plans, and 46 percent of 401 2 (k) plan assets. Bond Index 4 60s 10.0 6.0 10.1 19.1 21.4 33.5 27% Consistent 401(k) Part Co icip nsisten an t Sa ts Bet mple ween 2007 and 2013 Percentage of consistent 401(k) plan participants 160 60,370 44,482 67,468 82,935 86,739 103,826 130,897 of in analysis tracks the formation about 40s account individual 401(k) pla balances All of 4.n 2 9 part million icipa 40 n1(k t accounts. As of ) plan participa Dec nts who ember ha 3d a 1, 20 ccounts in 13, the EB the RI/ICI year-end 2 401(k)0 07 and fully 20 years, invested iand n target-date 29 percen ft havin unds at g year more Moved A -e than nd w20 ay20 y 13. e This ars Fig(Fi high ure gur 1 leve e 2). 4 l of In persistence contrast, in t in t he ent arget-date ire EB f RI/ICI 401(k) dat und investing waabase s Participat Internatioion i nal Fo n 4 undatio 01(k) Plans n of Emplo 1 Generat yee B e? Ch enefit Plans, anges in and th 401(k) Accou e International nt Bala Society of Certi nces, 2007–2013. fied Employee Benefit Specialists ” EBRI Issue Brief, no. 418, in stock marke withdr Experience awals, as t. values t they a Chicago: pproa hat o Plan ch retir ccurred in Sponsor Cou ement. 200 8 n ci (Fi l of America. gure 8) tende d to pull 401(k) account balances lower, although 15 All consistent sample 8.6 3.8 5.6 11.8 23.5 46.7 Deloitte Consulting LLP, International Foundation of Employee Benefit Plans, and the International Society of Certi 23.5% fied Percentage of consistent 401(36% k) participants, Although some movement to or away from by age, y high co ear-ncentra end 2007 tions in equities may be d and year-end 2013 ue to active reallocation by participants, 2By Jack Va Figure 5, 401(k) nDerhei, E Account Ba BRI; Sarah Holden, ICI; lances Among 21,859 Consistent 401(k 20,016 36, Luis A 763 ) Participa 49,919 lonso, EBR nts from 2007 55,517 I; and Steven Bass, ICI Through 70,214 2013 91,435 ............................ 8 Zero in From Zero Remained Moved to Net Zero in EBRI/ICI EBRI focus 401(k) da es solel tabase >5 a to nd y 1 on emplo 0each 2 subsey qee uent benefits research — no lobb 12, year 13 through year-end 2013. ying or advocacy. in 2013, observed acro database37 incl percent o uss all part ded statistical f partici icipan information p t ages, altho ants had five or fewer year about 2 ugh the lowest leve 6.4 millios of n 40ltenure, 1 of parti (k) pla 24 percent n cipants r participeants, i main had ing n between 7100 2,67perc 6 fiv empl e ent allocat and oyer-sponsore 10 years, ed to target d - Because of these changes in the cross secti EBRI Em 2007 ploye EB eR B I/Ie Cn I 401( efit R k) e databas search In C esth itan ute Ig ssu es i 13. eo 2 B ns, comparin rn ie 401( f (ISSNk) 0 3.8 P 88 g average accou 7ar ?13t7 ic X)i p is an p5. u3 bt ls' ish A e ndt balances acr m llo on c t11.2 hat ly i bo y n th t e o E oss different ye mpl23. oye 0e Benefit R ar- e43. send cross- ea 4rch Institute, and 2015 report that the avera ICI Research Perspecge tivnumber of f e 21, no. 4 ( un Sds offered by t eptember 2015 he ).nearly 4 Availabl 00 e at 401(k) plan sp www.ebri.or onsors surveye g and www.ici d was 22 in 20 .org 15. diversified portfolios and ongoing contributions helped offset the impact. In the case of the youngest 401(k) 14 Employee Ben 0 efit Specialists. 2015. Annual Defined Contribution Benchmarking Survey: 2015 Edition. New York: S&P 500² by age, year-end 2007 and year-end 2013 18.8% it also may be due to passive 2007 changes, such 66,402by 2013 as the relative 47,807 73, at pric Z 127 ero es of equities and fixed-income 89,290 Zero by 2013 92,938 Change 111,070 securities 140, 2013 067 or the reallocation of 1100 13th St. NW, Suite 878, Washington, DC, 20005-4051, at $300 per year or is included as part of a membership subscription. Periodi- EBRI Ag stand e s alone in employee benefits research as an independent, nonprofit, and nonpartisan >10 to 20 Percentage of Account Balance Invested in Equities 401 Plan (k) plans, Sponsor Council holding of Am $1.91erica 2 trillion (form in ass erly Profit ets. The Shari 201n3g /4 EBRI/ICI 01k Counc 401 il( of k) database America). c200 overed about 7. 50th An nual half o Survey o f the unifverse of Profit 24 perc date Contributio fun ent ha ds fro ns, d between m which 2007 positive to 2 10 and 20 013 ly aff (55 eperc ct acco years, an ent) unwas seen t ba d 15 percen lances, am in ong co t had more th clude bot nsistent 4 h em an 20 years. ployer a 01(k) parti nd em cipants i ployee n contri their 20s. butions, an d most sectional snapshots can lead to false conclusions. For exam Percentage of a pl ce, newly formed plans would te count balance invested in equitiesnd to pull down the aver at year-end 2013 age BrightScope and Investment Company Institu Target-D te 2014 reports an av ate Funds Betwer een 2007 and 2013 age of 25 investment options in 2012, and an average of participants, ongoing contributions more than offset the impact of the stock market decline on their balances (Figures 5 35% Deloitte cals posta Consu ge rate p lting LLP. Avail aid in Washington able , DC, at andwww2. additiond aeloitte.com l mailing office/c s. ontent/dam/Deloitte POSTMASTER: Send ad/us/Doc dress chan ugments/h es to: EBR uIma Issun-capital/us-h e Brief, 1100 c- Figure 6, Changes in 401(k) Account Balances Among Consistent 401(k) Participants from 2007 Through 2013 ........... 9 106,992 75,516 30% 106,430 125,408 128,388 149,224 183,788 organization. It analyzes and reports research data without spin or underlying agenda. All findings, target-date funds towards fixed-income secur 100% ities over time. >80% to <100% >0% to 80% 0% >20 to 30 Zero in Moved Away From Remained at Moved to Zero Net Zero in 120 20s 58.6% -10.AT A GLAN 4% 48.2% CE 9.7% -0.7% 57.9% active 401(k) 401(k) pa Sharin rticip g an plan ants are d 401(k partic )in Plans: R ipa pla nts, nearly ns wh eflecti ere t 15 ng 2006 Plan he percent of pla employer Experien cont 1 to 20 ns, and 46 ribute ces. I . Chic >20 t n per o 40 20 ago, I c 12, ent of 40 nearly L: Plan >40 to 60 1(k) pla 9 Spo in 10 nsor Counci 27% n part >60 to 80 assets. The EBRI/ICI icipant l of s were America. >80 in 4 0 project 1(k) 13th St. NW, Suite 878, Washington, DC, 20005-4051. Copyright 2015 by Employee Benefit Research Institute. All rights reserved. No. 418. account balance, but would tell us nothing about consistently participating workers. Similarly, the aggregate average account 20 investment options when a target-date fund su 12.2% ite is counted as a single investment option. and 6). 11.7% Percentage of consistent 401(k) plan participants annual-defined-benchmarking-survey-2015.pdf whether on financial 108,461 data, option 79,s 093 , or tre 111,406 nds, are reve 131,641 aling 136, and 026 reliable 157,— the re 779 191, aso 967n EBRI information is 2007 Zero by 2013 Zero by 2013 Change 2013 Age 50s All By year-enA dge G 2013, roup the consistent sampleZ of 4 ero 01(k) part percent icipants a per lso w centas older, per on centaverage, perc comp ent ared per with cent the Introduction 9.6% 10.0% Target-Date Fund Use Rose Substantially in the Entire EBRI/ICI 401(k) Database is unique because of 30s its inclu 67. sion of 2% data pr -11.ovided by 1% a wi 56. de 1% variety of plan reco 9.0% rdkeepers, permittin -2.1% 65.1% g the analysis of Copyright plans wher In e t fo hrmation: T e employer his made co report is ntribu copyr tions (Figure ighted by th 7e Employee Ben ). This figure fee ll sli fit Research ghtly in th Ie nstitute (EBRI wake of the fi ) nancia and by l ma the rket 16 balance would tend to be pulled down if a large number of participants retire and roll over their account balances. 8.6% by age, year-end 2007 and year-end 2013 Figure 7, Most 401(k) Plan Participants Are in Plans with Employer Contributions ..................................................... 10 ? The a the nnu gold sta al EBRI/ICI 401(k) database up ndard for private analysts a date report is base nd decision d on large cross sections of 401(k) plan part makers, government policymakers, the media, and icipants. The The National Bureau of Economic Research 7.3% 26,224 (NBER) 23,960 , which 41,867 publishes its as 55,938 sessment of U.S. business cyc 62,436 78,021 100,183les, indicated that 10 0 20s 7.6% 10.1 2.6 2.7 5.8 19.1 59.8 20s 13.3% -6.0% 7.3% 2.8% -3.2% 10.1% 27 >5 to 10 6.3% Russell 2000 index. Tacoma, WA: Frank Russell Company. 31% 26.4 million participants in the entire EBRI/ICI 401(k) database. For example, only 12.5 2 perce 11.2nt of the participants in the 12.7 5.4% 12.5 13.2 Lifestyle funds 14.1 maintain a pre 14. determined risk level and ge 8 14.0 14.7nerally use words such as “conservative,” “mo 14.2 14.6 derate,” or The Investment Co the activity crisis, reachi EBRI/ICI of ng 401 partici mpany I a low (k) dat 40s p of ants i n 85 stitut aba n perce 73. se, whic 401(k e (I 4%CI). nt in ) 5. h is 3% plans It may 20 co 1 -11. 0 of varyin nstructed fro , but mostly be 3% useg size d with 4. m re 62. 7% s—from very l out permission but citatio the boun 1% admi ded nistrative recor by 201 arge 7.7% 2. Sma corporati ller dn s of of the o 401 -3. ns to small 6% 401(k (k) plans a source ) 69. pla 8% businesses—wit n is, repr s re less l required. esents ikely t Re a lar o port h have a ge 16.1 Holden, Sarah, and Elena Barone Chism. 2014. “Testimony for 20 4.1% 14 ERISA Advisory Council: Issues and Considerations Thou gh target the -date publi fund use c. was relatively stable 4.1% in the consistent sample between 2007 and 2013, edging up only 30s 79,851 7.8 58,358 3.2 86,975 104,990 3.7 3.7% 109,746 7.2 129,857 19.6 160,664 58.4 cross sections 30s cover participants with a wide range of part 8.7% Percentag -4. e of 0% Account Balanc 4. e7% Inv ic eipation experie sted in Tar 3.get 1% -Dat n 3. e F ce in 401(k) p 2% unds -0.9% lans; therefore, meaningf 7.8% ul the most recent recession occurred from December 2007 th 3.3% rough June 2009. See National Bureau of Economic Resear 2.9% ch 3 >10 to 20 2.7% 1 consistent group were in their 20s and 18 percent were in their 30s at year-end 2013 (Figure 1). In the entire EBRI/ICI 2.3% 1.9% About half of traditional IRA assets resulted from rollovers from employer-sponsored reti 1.7% rement plans. See Holden and “aggressive” in their name to indicate th Figure 8, Dom cross section, variety of investment optio 80 or snap estic Stock shot, of 401( an ns. d Bond Mark T k) pl he e fu E ans at th m et p n Indexes ld’s risk level. oyee e end of Bene .............................................................................. fit Lifestyle fund Re each year. search Inst Th is g tute enerally are inc e EBRI (EBRI) /ICI w 40 as founde 1(k luded in the no ) dd ataba in 1978. se is a cross section of n- Ittarget- s m ................. 12 issidate on is to Changes in Consist availabil employer ity: Th contributions. is report 50s is av Fewer tha e 75. ailabl nt 401(k) Participants’ Allocations to Equities and Target-Date 3%e on n thr the ee-quarters o -11. Internet 6% 25% at f www.ebri.org 401(k 63.7% ) partici an pandts in a 7.3% t w plans ww.icwit i.org -4. h assets of 3% 71. $1 0% 0 million or less are Around 40s Facilitating Lifetime Plan Partici 8.3pation.” Statem 4.1 ent of the Investment Compa 4.6 8.6 23% ny Institute: 26.3 S48. arah Hol 1 den, slightly, tar get-date fund use 26% has increased substantially in the entire cross-sectional EBRI/ICI 401(k) database over the 40s 7.5% 157,320 -3111,153 .1% 154,209 4.4% 178,224 3.9 181, % 402 208, 0.8160 % 251, 8528 .3% analysis of the potential for 401(k) participants to accu 100% >80% to <100%mulate retirement assets must exa >0% to 80% 0% 14.6 mine how a consistent 2010. >20 to 30 Sabelhaus, John, Michael Bogdan, and Daniel Schrass. 2008. Equity and Bond Ownership in America, 2008. contribute to, to encourage, and to enhance the development of sound employee benefit 401(k) database at year-end 2013, 13 percent of participants were in their 20s and 23 percent were in their 30s. Thirty- Chism 2014. 20.9 21.0 balanced fu50s nd category. 10.0 6.0 6.8 16.9 26.9 33.4 the entire po in plans receiv <$10, pulation o ing 000 employ $10,000 t f 401(k) pla oer >$20, contributio 000 ton >$30, partici n 000 t s. oThis rises to pants, an >$40,000 to d it >$50, 9 000 t r0 epres pe o >$60, rcent ents 000 t of o a participants >$70, wide ra 000 to ng >$80, e of 000 t in o pplans articipants—in >$90,000 t with o >$100, mo 000 t re tha c oludi >$200, n ng t $ 0001 h0 ose million to who Funds 60s 74.7% -11.0% 63.7% 7.5% -3.5% 71.2% EBRI explo Senior Director, Retir 50s res the breadth of emplo ement 8.1% and I 191,872 nvestor -2. 138,936 9% Research, yee ben 185,259 and Elen efits and related issues. 5.2% 213,444 a Barone4. Chism, Associate Cou 218, 8% 845 246, 1.9% 807 291, n10. sel, P 642 0%ension Regulation same period. At year-end 2007, 27.1 percent of 401(k) participants in the consistent sample owned target-date funds, Wh group of participants’ 401(k) a o we are >30 ccounts change over time. 28.3 Washington, DC: Investme $20,000 $30,nt Compa 000 prog $40, ra 000 m nsy I and n $50, stitute s000 ound p (Dec $60, ubl 000 ice m pol ber). $70, ic 27. y 000 1 t Availa hroug $80, h 000 ble at objecti $90, ve 000 researc $100, h a 000 nd educ $200, a000 tion. EBRI is the only 60 Russell 2000³ 60s 14.3 8.0 7.1 11.9 21.0 18.9 25.8 six percent Figure 9, Aver of age Asset A the participant llocation of s in the consis 401(k) Accounts by Participant A tent sampl 8.2 e w 8.e 5re in their 50s and 14 perc ge 7....................................................... 9 7.7 ent 9.were in 0 32. 9. th 0 1eir 60s, compared 9.2 .......... 13 17 18% Sources and Types of Data 33.4 are young and individuals who are new to 12. their 4 jobs, as well as older participants and those who have been with their $100 million in EBRI 60s assets and 9 studies 10. the worl 5 perc 0%13.ent o 5 128,627 d of health and retirement ben f pa-2. rticipants 96, 8% 294 in 128,801 plans with 7.2% 147,257 more efits than — issue 7.148, 1% $1 824 00 s mil such a 164, 4. lion i 3% 473 sn 40 assets. 1(k)s, 186, 14. 535 3% IRAs, retirement (June 17). Available at www.dol.gov/ebsa/pdf/ACHolden061714.p 1.8 df Analysis of a compared Househowit ld survey info group o h 25.1 60s Allperc f consis rmatio ent A72. of t ltent 4 l n indicates that 9% he y 01e (k) pl ar-end -11. an pa 2% ho 2007 36. useho rticipant 0 cross sect lds an s 61. provides insi tici 7% ion pate rebalancing their portfolios (Figure 1 ght i 7.5 9% ). nto ho By ye w t arh -en -3. ese i 3% d 201 nvestors reacte as they age. See Sabelhaus, 3, o 69.w 6% nership in d to the the private, nonprofit, nonpartisan, Washing 3. t1 on, DC-based 1org .9 anization committed exclusively to 28 4 18.9 1 Siz 2.0e of 401( 3.4 k) Account Balance 13% 2.0 47.1 12% 3.0 www.ici.org/pdf/rpt_ All consistent sampl08 e _e 11% 44. qu 1ity_own 44.4 e 10. rs.pdf 0 5.2 6.4 12.9 24.0 41. 3.5 5 2% Account balan 47.c 2es are net of unpaid lo an balances. GICs are insura 26 nce company .7 products that guarantee a specific rate of return on the invested capital over the life of the with 27 percent and ? Two major insights emerge fr 11 percent, respom looking at consistent partic ectively, in the entire database. ipants in the E BRI/ICI 401(k) database over the six-year income adequacy, consu 2.3 m 4.er-drive 6 n benefits, Social Security, tax treatment of both retirement and health All 8.6% -3.2% 5.4% 4.6% 1.4% 10.0% current employers for ma Source: Tny abulyears. For ations from p 27, ubl E 785 B icexa R Ip /IC ol m I P ic ple, 26, a yrti 025 cre ipat year s ant-D earcih rected R 43, a -end nd 284e educ 20 tirem 13, at e 56,351 int P on 1l3 an D on perce e ac ta C onom 62,627 n ot of llecti ic o 4 s n P e0 c1 ruri oj ( 75,647 ect. k) partic ty and eipa m 92,112 pn loy ts in th ee bene e EB fit RI/ICI issues. 40 3 15.8 Several This Bogdan, and Schrass 2008. report is bein EBRI and I g pu CI mem blis >5 he t boers provi d simulta 10 dn ed r eoue scords on ly as an acti EBRI ve p Issue Br articipa ief, n ts in no. 41 408, an 1(k15 ) d pla .6 IC nI Researc s for which P h te hr ey ke spective pt re , Vol. 21, cords at financi consistent sa al crisis mple of 20 had incr 08, beca eased to use the 3 same 0.4 perce investors can nt, w 16.5 hile ow ben observ ership of ed before target-date (year f-u en nds in d 2007) a the 2n0d aft 13 cross sectio er (year-end 2013) n had 2013 EBRI/ICI 401(k) database 10.2 3.3 5.0 11.9 25.7 16.0 43.9 18.0 Figure 10, Changes in 401(k) Participants' Allocation to Equities Between 2007 and 2013 16....................................... .9 .. 14 18.3 17.7 contract. Consistent Sample in 2007 EBRI/ICI 401(k) Database in Consistent Sample in 2013 EBRI/ICI 401(k) Database in benefits, Source: Tabul cost ati 8.2ons from manage EBRment I/ICI Pa, rtiworker a cipant-Directed R nd employe etirement Prl an D attitude ata Cols, lecti policy reform p on Project. roposals, and pension assets period from year-end 2007 to year-end 2013 23 Note: A target-date fund, w 16.9 EBRI’s hether a m membe utual fund, bank rship : include col s la e cti cros ve trust, l s-secitfe i ion nsurance separate account, or other of pension funds; businesses; trade associations; Holden, Sarah, and Daniel Schrass. 20 80,824 15a. “D 61, efi 284 ned Cont 87,ribution 602 103,606 Plan Participants’ Ac 107,064 121, tivities, 2 846 014. 141,981 ” ICI Research 401(k) database were in their 20s, while 11 percent were in their 60s (Figure 1); 19 percent of participants had two or 5 So urce: Tabulatio ns fro m EB RI/ICI P articipant 17 -D .9 irected Retirement P lan Data Co llectio n P ro ject No. 4, Septem Source: ber Tabulations 2015. from EBR >10 to 20 I/ICI Participant-Directed Retirement Plan Data Collection Project. year-en the f S&P increased con 500. inanc d 20 Ne ial 13 w York: Sta market crisis. s.iderably mor These plan ndar The e r to de ann & Poor cordkeepers 41.2 perc ual EB ’s. ent RI/ICI in(an clude mut 40 increa 1(k) s data ue alof fun base u 16. d 1 compan per pdates provi centage ies, banks, i points de a snapshot o )n . B surance compa ecause tar f all pa get-date nies, an rticipants fud nds at a are 2.8 2007 2013 The value of this percentage is lower than it would have been if it merely reflected employee turnover and retirement. Any Note: Equities include equity funds, company stock, and the equity portion of balanced funds. The consistent sample is the 1 pooled investment product, typically rebalances its portfolio to become less focused on growth and more focused 1 and funding. There is wi labor de uni spread ons; heare lth c cog aren p ition rovide that if employee be rs and insurers; governm neefits nt org data exist, EBRI kno anizations; and servicew fis rm it. s. 18 Consistent Participants Have Accumula 20 The year-end 2013 EBRI/ICI 401(k) database represents 26.4 ted Sizeable 401(k) Account million 401(k) plan participants. Balances The co nsistent sample is 4.2 millio n 401(k) plan participants with acco unt balances at the end o f each year fro m 2007 thro ugh 2013. 163,274 119,168 159,226 179,663 179,878 197, 59. 867 8 222,145 Report (April). Available at www.ici.org/pdf/ppr_14_rec_survey.pdf 21 The Investment Company Instit 14.9 ute tracks reallocation of account balances and changes to the asset allocation of fewer years 2 of tenur 12.0 e at thei >20 to 30 r current jobs, while 5 percent had more than 30 years of tenure (Figure 2). 29 The consistent 4.2 million 401(k sample is 4.2 million ) plan participants w 401(k) plan participants ith account balances at the end of each y with account Figure 7 balances at the end of each y ear ear from 2007 through from 2007 through 2013. F 2013. unds include consulting firms. Although on income as i the EBR t approaches and passes the target date of I/ICI 401(k) project has co the fund, w llected d hich is usually ata from 19 included in the fund's nam 96 through 2013, th e. e universe of data given often Figure year used as 11, o Younger -en The a d a de ; some o Source: T verage 4 fault 401(k) Participants abulations from inv f th 01(k) account balance fell 25.8 percent in estment opt ose partici EBRI/ICI Participant-D pan i on Ha ts are n ve inir 401(k) pla ect Higher Concentrations in Equities ed Re etirement Plan w to thei ns with automatic enrollment, Dr ata 401(k Collection 20 ) pl Project. 08, and then ans and perha ................................................. rose from 2009 through year-e ps new to some of t investing, an heir growth d t is hnd 2013. re u....... 15 slat may ed 2 time a 401(k) plan sponsor changes service providers, all participants in the plan would be excluded from the consistent Other stable- The year value fun -end 2007 EB ds include synt RI/ICI 401(k) databas hetic GICs, e represents 21 which consist .8 millio n 401 (k) plan pof a portfolio articipants. of fixed-income securities “wrapped” with a 56.6 56.6 Note: Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of plan loans. Retirement savings Note: The EBRI/ICI 401(k) database contains 21.8 million 401(k) plan participants at year-end 2007 and 26.4 million at year-end 2013. The consistent 238,023 175,205 225,318 250,284 248,645 267,513 295,747 mutual T funds, bank he consisten col t sale m cti ple ve trusts, l is 4.2 millio ife in n 4 surance separate 01(k) plan particip accounts, and any ants with account b pool alaed i ncen svestm at thee e nt product pri nd of each ym ea ari r fr ly o im nvested contributions for a sample of recordkeepers. >30 The survey results indicate a minority of DC plan participants change their asset Tren U.S. De ds in partm the econsistent gro nt of Labor, Employee up’s account Ben balances h efits Security ighAdministration light the accum . 20 ulation 15. Private effect Pension of ongoin Pl g 4 an 0Bulleti 1(k) partici 48 n, A .5 bp stract of ation. At held in plans at previous employers or rolled over into IRAs are not included. Components 50. may 6 not add to 100 percent because of rounding.   3 Most 401(k) Plan Participants Are in Plans With Employer Contributions to the s not have providers 0 p ex rea vari Tpe he y d es from y of automatic rience ear sample -end 201 consists d a 3 EB e dire ar t of RI/4.2 e ICo ct impact In 401 million 401(k) year. I rollment (k) databas n of plan a in e d r th epr participants w r dition, th e es e fi cent y entnancia s 26. ith 4 m e e acc ars. T illi plan l ma ount o n 401 balances s his rket (kusing a ) pl hel an crisis on at part the end of each y ps to icparti ipantex s t . cular h plain eir savin ear from 2007 through the provider relat gs. Ican cha in ve stability other 2013. Pa wor n rticipant ge ov of dage s, ne er time. the consistent is age as of w partici Recor pad ns ts Overall, the average account balance increased at a compound annual average growth rate of 10.9 percent from sample. EBRI’s work advances knowledge and understanding of employ44. ee 7 benefits and their guarantee (typi EBRI delive cally by an ins rs a stead urance compan y stream of invaluable research and anal y or a bank) to provide benefit payments y according to the plan at book val sis. ue. in the security indicated. Age group is based on the parti 43. cip 6ant's age at year-end 2013. 2007 through 2013. Age group is based on the participant's age at year-end 2013. . 2015b. “ the y De ear-end indicated. fined Contributio Components n P do not lan add to 100 percent Participants’ because Activities, Fi of rounding. rst Quarter 2015.” ICI Research Report (August). Although annual updates of the EBR 79, I/ICI 882 401(k 59,277 ) databas 84,e 731 provid101,071 e an invaluab 104,663 le pers121, pective 863 of 40 148,1 399 (k) account 40.2 Dec-06 Al Dec- l 07 All Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 allocation in any given period. For example, year-en Figure 201 12, d 2 Form 55 20 Cha No13 te: Equit , 23. nges in ies 00 5 inc perce A lude equit Zero nnual nt A y of t Re fllocation to unds ports he co , co mpany (V nsistent s ersion Equities Among to c10.5 percent of DC plan participants ch k, and1.2). group the equi Washin t ha y po rd tio more Consistent 401(k n og f balanc ton, DC: th ed f an unds $200,000 in U.S. . Funds ) Part Departm includanged e icipa m their ute ual n nt o ts fthe asset allocation of their account unds 401(k Between 2007 a f Labor, Em , bank) ac co llecou ctive tr n plo u ts at their c sts, yee B n lifd 2013 e enefits u ....... rrent 16 25.4 30.2 Percentage 32.4 of active 401(k) participants in plans with were encrypted to conceal the ident imity of p33. ort7 a nc employers a e to the natin on’s d em econom ployees y a, m but ong were policy cod make ers d s , to he that new bot s me hdi could a, and b the e trac publ ked over ic. It sample as might be wi co llin 2007 to 2013, to $148,399 at year-end 2013. mpared to t g to invest i he n cross sections, wh equities because they ere ne did no wly enroll t direed part ctly expe icipants ar rience the e i impact of t ncluded, ma heny o fina f w ncial mark hom couet c ld have risis EBRI publications include in-depth coverage of key issues and trends; summaries of research Table of Contents insurance separate acco unts, and any po o led investment pro duct primarily invested in the security indicated. A ge gro up is based o n the participant's age Available at w So ww.ici.or urce: Tabulatg/pdf ions from /ppr_1 EBRI/IC5_r I P artec_s icipant-D urvey_q1.pdf irected Retirement P lan Data Collection P roject. 6 balances, asset allocation, and loan activity across wide cross sections of participants, the cross-sectional analysis is not 30 24 does this by conducting and publishing policy research, analysis, and special reports on balances, and 6.6 percent changed the asset allocation of their cont 75 ributions in 2014 (see .3 74.7 Holden and Schrass 2015a). For the employers, Security A whd ile a ministration nother 18(Jan .8 percent uary). Avai had labl betw e at 73. een 4 ww $100 w.dol. ,000 gov/e and b$20 sa/pdf 0,000 /201 (Fi 2p gens ureionp 3). In lanbul contrast, letin. 72.9 pd in th f e broader What we do em ployer contributions (by plan assets, plan year 2006–2012) 71.2 For the report at year-en on the year-en d 2013. Ro w percentd ages 2007 EBRI/I may no t add toCI 401(k) database, see Holden et al. 2008. 1 00 percent becaus69. e o f8 ro unding. 71.0 been on a r multipl Some recordkeepers supplyi automati ee tirem years ent account, .cally en finding rolle s w and d i hile t n ng data were u to policy a tar hose g develo who et-date fund. hel np able to provide comp d ments; 401(k In )timel a accounts throu dditio y factsheet n, th lete asset allocati e offeri gs h t on h ng e stock hot topics; of targ on detail on market volatili et- d regula ate fu certain pooled asset classes n r d up s ty might da in 40 tes 1( 69. on legi k) p have 6 lan a slat s’ ive and Note: The consistent sam 67. pl 2e is 4.2 million 401 (k) plan participants with account balances at the end of each year from 2007 through Annual percent change in total return index65.1 Introduction .......................................................................................................................................................... 4  employee benefits issues; holding educational briefings for EBRI members, congressional and Figure well suite 13, o d Cha to The median examini nges inng the 10 (midpoint) 401(k) account balan 0 P impact ercent Allocati of parton to Equities icipation in 4 ce increased 01(k Amon ) plans g Consis over time. at a compound a tent 40 Cross 1(k) Pa nnual a sections chan rticipants verage Bet growth rate of 15.8 per- ge ween in com 200p 7osit and ion 58 201 .63. A ge and t 57.9 enure groups are based on participant age and tenure at year-end 2013. The "all" category includes participants with 22 most recent update covering 2015:Q1, see Holden and Sc EBRI/ICI 401(k) database, 10.0 percent had accounts w hrass 2015b. ith more than $200,000, and 9.6 percent had between regulatory developments; comprehensive reference resources on benefit programs and workforce 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 investment l different reaiction. To neups has incr gain insight into the eased, resu lting in mor reaction o e partic f 401(k ipan ) plan ts h parti aving cipants to the opportu the nit financi y to select 14.3 al mark tar et crisis an get-date fu d nds events . S&P 5013. 0² 3 Russell 2000³ Barclays Capital U.S. Aggregate Bond Index 4 Holden, Sarah, and Jack missing tenure i Van nfoD rm erhei. 2001. ation.fe Ade ccora unt l bal age anc “Th nc ey se as Im re par taff, pact o tica ipant nd ac the fc Employ o unt ne ba wls an m ces er-S edi hel ad ;el a in 401 nd s ected Investm (kp ) pl ons ans at ori th ng e p p artubl e icnt O ipan ic op ts' c purr itions o ni ent on s urve n 401(k) Plan ys on employ ee 7 10.1 10.0 10.0 10.0 8.7 8.3 8.1 8.6 The Vang 2013 .......................................................................................................................... uar cent over the p d Group. 2015. eriod, to $75,359 at year-end How Americ 7.8a Saves 2 7.5 015: A 2013. Report on Vanguard 2014 Defined Contri............................ 16 bution Plan Data. from year to year because the selection of data providers and sample of plans using a given provider vary, and because Sample of Consistent 401(k Tenure refers to years at the ) Participa current employer and is gener nts, 2007–2013 ........................................................................... ally derived from date of hire reported for the participant. Tenure ................... 4  Data provided for issue eachs parti ; and cipant major survey include date o s of pu f birth, blic at ftitudes. rom which an age group is assigned; date of hire, from which $100,000 and $20 em 0,0 ploy00. ers and ar e net of plan loans. Retirement savings held in plans at previous employers or rolled over into IRA s are not included. Few consistent 401(k) participants had their entire 401(k) balances invested in equities, and only a small net movement assets could be identified. of 2008 through 2013, changes in their a bene20 fi06 t ils locations to eq sue 200 s. 7EBR 200 I’s8 Ed uities overa u20 c09 ation 20 an 10dll— Re20 and to s11 earch20 target-date F 12 und (EBRI-E fun RF d) s, in perform particular— s the chari are table, 19 Participants’ Asset Allocations: Preliminary Findings.” Working paper prepared for the Center for Pension an d 2 See Sabelhaus, Bogdan, and Schrass 2008. 401(k) pa Valleyrticipants join or For 200 ge, 7 PA: Th EBRI 2013e Van leave pl meetings 2007 guard present an ans. Grou 20 In 13 p, additio V d anguar 2007 explore i n, th d C 2013 e a Fs eigur nt sues nalysis covers er for e 13 2007 with Ret thou irem 2013 account ght ent R leade e 2007 search. balan rs from all se ces hel 201 Available 3 d in 2007 ctors. at 401(k)2013 plans at will not reflect the years of participati on in the 401(k) plan if the 401(k) plan was added by the employer at a later date or if a tenure range is assigned; outstandin educa g lo tiona an ba l, and lance; scient f ifi uc nds func in ti the ons par of the ticipant Institut ’s inves e. EBRI tment po -ERF is artfoli tax-e os; and xempt org asset anizatvalues ion away f Age a rom tha nd Tenure of Consiste t full concentration occurr nt 401(k) Participants ed between ye .............................................................................. ar Fi-en gurd e 17 2007 and year-end 2013. To be 38.8 100 percent inv .................. 4 ested in   ? Analysis of a consistent group of 401(k) participants highlights the impact of ongoing participation in examined. For the most part, despite periods of market uncertainty and volatility, there were relatively small changes in Figure 2 Retirement Research (CPRR) Current Pension Policy Issues Conference, Miami University, Oxford, OH (June 8–9). Figure 14, Changes in 401(k) Participants' Allocation to Target-Date Funds Between 2007 and 2013 ......................... 17 EBRI regularly provides congressional testimony, and briefs policymakers, member organizations, 25 Reflectin https://institut g their hi20s gher ional.vanguar averagChanges in 100 P e ad.com/iam g30s e s an uppd te ortenure, t d by /pdf/HAS15.pdf cont he co e40s ri rcent A butnsis ionstent gro a llocation to E nd grantup al s 50s . so had m quities A edia 60 m n (m song idpoint) and av All erage account participants’ current employers. Retirement savings held in plans at previous employers or rolled over into individual 20 there are restrictions on participating in the 401(k) plan immediately upon h Figure 4 ire. attribute Changes in Consist d to those funds. Ae n accou nt 401(k) Participants’ Account Balances nt balance for each participant is the sum of the participant 32.4 ’s assets in all funds. 20 95 95 equities, the 401(k 401(k ) plans. ) investor At year-end 2 Changes in 100% Consistent would have 013, the avera Sample allocated their Allocation to Had ge account balance amon Longer Tenure Than Participants full 401 Ta (k) bala rget-Date Funds A 95 nce to g consistent participants was more than twice equity fm unds a ong nd/or company stock. consistent 401(k) plan participants’ exposure to equities or target 94 -date 94 funds between year-end 2007 and year-end 94 94 Consistent Participants Have Accumulated Sizeable 401(k) Account Balances ......................................................... 6  Because no target-date funds and the medi have a a on employe 100 percent equity alloca r benefits. 3, 4tion, investors with a 100 percen 93 t allocation to target-date 2007 2013 2007 27.2 2013 2007 2013 2007 2013 2007 2013 2007 2013 92 26.9 Co 26.5 nsistent91 401(91 k) Participants Between 2007 and 2013 retireme balances that nt acc Sour cwere much o e:unts (I Tabulations RAs) a from hi Egher Br Re not I/IC than I Pa incl rticip the anude t-Dirmedian ed in cted R th etire ana an emend a t Ply lav nserage D is. ata Co To accoun llectioex n Pplor roje t bala ct.e the nces o full impa f the ct of o broader EB ngoing RI/ICI partici 40 pation 1(k) in Consistent 401(k) Participants Accumulate Significant Balances 90 Plan balances are constructed as the sum of all participant balances in the plan. 89 in the EBRI/ICI 401(k) Database 89 at Year-End 2013 89 Analyzin In any . given y g th 2002. e “Ca group of ear, the cha n 40 consi 1(k)n Accumulation ge in stent 4 a partici 01(k) participants sp Ge ant’s accou nerate Si at ngnificant t ye balanc ar-end Incom e is a 2013, the ce o for mbination Future Retirees?” data sho of three w that 88 factors: 1.Investment Company 4 per cent, on net, moved Figure 15, the average Younger 401(k) Participants account balance Consist among all participants in the Ha entve 401( Higher Concentrations in Target k) Participants Bet EBRI/ICI 401(k) database. The ween 2007 an -Date Funds d 2013 ........................................ consistent group’s media 88 19 n 201 8 3. 87 Not e: EquitE ies B in R clI ud issu e equies ty funds pre , css ompany rele stoc as k,e and s ton ne he equitywsworthy portion of balancdevelopm ed funds. Funds ents, include m and i utual fs u nds among , bank colthe mo lective trusts 87 st , lifwidely qu e oted funds would not be counted as having 100 percent equities. 86 Average 20s EBRI Per 30s c Ientage of c ssue Briefs is 4 a ons 0s mont istent 401( hly periodi k 50 c )a par sl wittic h iin pants -depth e , 60s valuation of emplA oy ll ee benefit issues Changes in Co The cross-sectional EBRI/ICI nsistent 401(k)401(k) databa Participants’ Account se also shows that younger p Balances ................................................................... articipants and those with shorter tenures tend 85 ................. 8 to   database (Figure 4). At year-end 2013, the average 401(k) account balance o 16.0f the consistent group was $148,399, 401(k) plans, and to understand how 401(k) plan participants have fared over an extended period, it is important to Percentage of participants by years of tenure, year-end 2007 and 16.3 year-end 2013 insurance separate accounts, and any pooled investment product primarily invested in the security indicated. The consistent sample is 4.2 million 401(k) 15.1 away from a Institute P balance was m 100 erspective sou perc rces ent ore than fo 8, no. equities al on em 3ployee ur , and times the media locatio EBRI benn —14.6 percent of Issue Br efits by all media. n balance acro ief, no. 2 this 51 ss all participants at year-end (November group at year-en ). Availa d ble 2007 a at ww n 2013. d 13. w.ici.org 2 perc /pent d 13.7 f/per at year-en 08-03.pdf d Percentage of consistent 401(k) participants, $148,399 and trends, as well as critical analyses of employee benefit policies and proposals. EBRI EBRI 79 /ICI 401(k) Database¹ ?O Ne u w contr plr an par tic78 ipibuti ants wons ith ac by th count bala e nc par es at tic t by he end ipant, age, y of e the employer, or ach ear year- fend 2007 and y rom 2007 through 2 both; 013. A ear ge gr-ou end 2013 p is based on the participant's age at year-end 2013. have lower 401(k) balances than those who are older or have longer tenures. See Holden et al. 2014b. Sou77 rce: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. analyze a more thangro twiuce the avera p of participg ae accou nts whon have t balabeen nce o part of t f $72,383 amon he database g participants in the for an extendedentire EBRI period. This /IC consistent gro I 401(k) database. up of 21 Investment Options Years of Tenure Changes in Consistent 401(k 76 ) Participants’ Allocations to Equities and Target-Date Funds 7.8 ......................................... 11  Figure 16, Cha 7.0nges in Zero Allocation to Target-Date Funds Among Consistent 401(k) Participants Between 2007 and EBRI directs membe Notesr s is a and mont other constit hly periodi 6.5cauen l provi cie di sng to curre the informatio nt information n they need an on a variety of d emunde ployertakes e benefitnew 201 Exposure to Equities Has Declined Slightly Amon 3 and were ww 1 See w.e 0F 0 igur percent bri. es 11, org/ 12,pdf inv and 13 /e bsrie for ted in add fspdf ition e al det /1 qby uiti 10 ail. age, y 2ib. e 5.9 Ps (Fi ercpd entg ages fear ure m-ay end 2007 and y 13 not ). add t This n g Consistent 401(k) o 100 e per t ch centan bec ear ge r aus -end 2013 e e offl roun ects 7. ding. Participants Between 20 1 percent moving away from 07 and the 6.0 Plan Sponsor 5.5 Note: Council of America 2014 reports that amon A target-date fun5.2 d, whether a mutual fund, bank collective trug st, 401(k) plans s life insurance separu atrveyed with e account, or oth a eru poo tomatic enrollment,72.1 led investment product, percent 73 4.9 Consistent Sample² 4.2 $121,863 72 71 2.1 ? Younger 401(k) participants or those with smaller initial balances experienced higher percentage The median 401(k) account balance among the consistent participants was $75,359 at year-end 2013, more than four participants ty(a pic longitudinal ally rebalances its sample portfolio to) is bec 0 to om dra 2 e les ws >n f 2oc to from th us 5 ed on gr >e a 5 o to wt 10 nnual h and m cross sections. or >e f 10 to ocu2 s0 ed on inc >20 to ome as 30 it approac >30hes and pas 26 ses the target date ? Total investment ret research on a urn on n ongoi top account icsng . EBRI ba balan sis. ef ices, whic s a weekly h roundup depend s on of ME oved t the BRI o 100 performa research and ncei o nsf ig fi htnancia s, as wl mar ell ask up ets and on dates on 2013 ...................................................................................................................................................... 20 9 publications 100 use target-date funds 2013 In the Exposure percent EBRI/I to E al CI 40 location to quities 1(k) as the d Has De data somethin bas efault investme cline e, inv g l d Sl es ess, 5.7 tment o ightly nt in 2013, comp Among Cons perc ptions ent m are gro oving istent 4 ared with 30.6 percent in 2006 (see Plan upe to a d 0100 perc into 1(k) Pa eight rticipants ent broad alloca cBet ation, and tegories ween 2 .0 7.5 0 Eq 7 a Sponsor Council of percent sticking with ui nty f d 2u 0nd 13s c ............. 11 onsist of   $104,663 For statistics indicating the higher propensity of withdraw Moved Away als among participants in their $101,071 60s, see Holden and VanDerhei of the fund, which is usually included in the fund's name. The consistent sample is 4.2 million 401(k) plan participants with account balances at growth in account balances compared with older surveys, studies, litigation, legipa slatrticipan ion and re ts or those with la gulation affecting emrger init ployee bene ial balances. fit plans, while 100 Percent Moved Away From Remained at Percent by Net 100 Percent times the median acco EBRI unt maintains an balance of d $1 analy 8,433 ze for s the mo particip st ants in t compre he hen ent siire EBR ve databa I/ICI se 401(k of 401(k)-type ) database. programs in the the allocation of assets in an individual’s account; and . 2004. “Contribution Behavior of 401(k) Plan Participants During Bull and Bear Markets.” National Tax the end of each y 4% ear from 2007 through 2013. Age group is based on the participant's age at year-end 2013. See Figures 15, 16, and 17 for 100 pooled inv Evidence of Reallocation Activity to or from percent -1.6estments prim allocation toaril eqy uities i invested in n both s200 tocks, includin Equities A 7 a $84,731 5%nd 2013 m g e . In ong Consistent 401(k) Participants q uity other mutu words, abo al funds, ut ha bank lf of co s, bank co nsistent llect 5% 401 ive trusts, li (k) participants fe America 2007). BrightScope and Investme 100% Fnt rom Company Institute 2014 al 100% Remained M so f oved t ind rising avail o 100% aNet bility and use 100% -2 of target-date funds .0 2002. In addition, nonhardshi $79,882 p withdrawals, which are generally limited to employees who are aged 59-½ or older, constitute Changes in Consistent 401(k in 2007 )EBRI Pa 100 P rticipants’ Allocations ’s erc Blent og by 2013 supplement 100 P s to Equities our ercent regula r ............................................................ p2013 ublications, Change offering comm in 2013 entary on ques........ 11 tions   Age -4.2 10% Changes in Consworl isten d. t 401( Its co k) Particip mputer simul ants’ Allo ation catio analy ns s e to s Eq on So uities cial Security reform and retirement income adequacy Three primary factors affect account balances: contributions, investment returns, and withdrawal/loan activity. The Figure 17, Changes in 100% Allocation to Target-Date Funds Among Consistent 401(k) Participants Between 2007 $72,383 Association Proceedings, Ninety-Sixth Annual Conference on Taxation, November 13–15, 2003, Chicago: 44–53. $65,454 Age in 2007 receiveby 2013 d from news repat ort 100% ers, policymake by 2013 rs, and others.Change The EBRIin 2013 10% Databook on Employee with t among 401(k) plans filing aud insurance separate acco ?h eir With 40drawa 1(k) accounts ls, borrowi untfs, and ot ully inv ited Form 5500 reports. ng, anested i d her loa p nn ooled repaym eq11% uiti investm eents. s at yents. Simila ear-end 2007 rly ,were bond fu fun lly i dn s a vere any sted in pool equiti ed eaccount s at yearprima -end 201 rily 3. 14% Movement in t20s he concentrati 14. o1% n of equities in 4 -8.1% 01(k) particip5. ants’ accou 9% nts results fro 6.8% $63,929 m -1. 4% changes in 12.stock values, in 7% a majority of all withdrawals (see The $59,277Vanguard Group 201 $60,329 5). 401(k) account ba are lanc uni es tend que. ed to increa $58,351 se with both age and tenure $58,991 among the consistent group of participants, as Sample of Consistent 401(k) Participants, 2007–2013 percentage change in average account balance of participants in their 20s was heavily influenced by the relative size Evidence of Reallocation Act and 2013 ............................................................................................................................... ivity to or from Equities Among Consistent 401(k) Participants ............................... ................. 20 14  At both year-end 2007 and year-end 2013, the vast majority of consistent 401(k) plan participants had at least some Washington, DC: National Tax Be Association nefits is a . s tatistical reference work on employee benefit programs and work force-related invested in bonds. Bal 20s ance$45,519 d26. funds 7% are pool -12. ed ac 1% counts i14. nveste 6% d in both s 4.3% tocks and bo -7. nds 8%. They ar 18.9% e classified into two 30s 14.8% -7.5% 7.3% 6.7% -0.8% 14.0% additio n to reallocation activity by participants. Although information on 19% specific trading activity of 401(k) participants is Evidence of Reallocation Activity to or from Target-Date Funds Among Consistent 401(k) they do in the cross-sectional EBRI/ICI 401(k) database. Younger participants or those with shorter job tenure at their 22 The change in any individual participant’s account balance is influenced by the magnitudes of these three factors of their contributions to their account balances and increased at a compound average growth rate of 46.6 percent About 19 percent, or 4.2 million, of th issue e 401(k s. ) participants with accounts at the end of 2007 in the EBRI/ICI 401(k) 10 exposure to equities, whether through equity funds, the equity portion of target-date funds, the equity portion of non– At year-end 2 Exposure to T 013, 71 percen arget-Date Fu t of plans in th nds Has Incre e EBRI/ICI 401( ased Slightly Ak) database offered target-date funds in t mong Consistent 401(k) Participants Betw heir investment een 2007 Exposure to Target-Date Funds Has Increased 18 Slightly Among Consistent 401(k) Participants At year-end 2 40s 013, 62 percen 16.1% t of non-target-date balanced -7.5% fund 8.6% assets were assumed to 6.1% - be invested in 1.4% 14.7% equities (see subcategories: target-date funds and non-target-date ba 21% lanced funds. A target-date fund typically rebalances its 30s 13.5% -4.4% 9.1% 3.3% -1.1% 12. 24%4% not availa EBRI make ble in the EBRI s information freel /ICI 401(k) datay base, available to al it is possible to observ l. e activity away from or to zero or 100 percent current Participants employers tended to have smaller account balances, while those who were older or had longer job tenure Holden, relative to Sarah per year betwe the , Jack Va starting acco en year-end 20 nDeru hei, Luis nt balance. Alons 07 and Foor exam , and Steven year-en ple, d 2013. a cBa ontributio ss. 2014a. n of“What a give Does n dollar Consiste amount nt Partic produic pes a lar ation in 401(k) ger growth database are in the consistent sample. These consistent participants had accounts at the end of each year from 2007 26% target-date balanced funds, or company stock. At year-end 2007, 91.4 percent of consistent 401(k) participants held at lineups, 41 per and 2013 ...................................................................................................................... cent of 401(k) participants were holding target-date funds, and 15 percent of the assets i .................................. 15 n the database were   50s 14.2% -6.9% 7.3% 5.2% -1.7% 12.5% Between 2007 and 2013 -33.8 Investment Co portfolio to be EBRI mpany I come les assume ns stitute, Quarterly Su focs usa publi ed on growt c service re 8 h an pplementary Data). The allocation to equiti d more spon fo sibility cused o to make n income as its finding it ap s pro co es in target-date funds a mpletely ches and acce passssi es the tar ble varies w at www.ebri.org get-id th the ate 40s 8.2% -2.4% 5.8% 2.7% 0.3% 8.5% equity holdings at year 5 -end. -37.0 tended to have higher account balanc Cont es. act For EBRI example, within Publications, (202) the con 659s -0670; istent fa grou x pp, among 40 ublication orde 1(k rs )t o partic (202) ipants 775-6312. with rate when added to a smaller account than it would if added to a larger one. On the other hand, investment returns of Plans Generate? Changes in 401(k) Account Balances, 2007–2012.” ICI Research Perspective 20, no. 4, and EBRI th Movement i rough 2013 n t .h Th e shar ese 4. e of 2 mi target-date llion 401(k) pa funds in rticipants m 401(k) pa ake u rticip pants’ acc a group of ounts results consistent partici from chan pants (o ges ir n the valu a longitue of dinaltheir least some equities in their 401(k) accounts; that share edged down slightly to 90.0 percent at year-end 2013 (Figure 60s 12.5% -6.3% 6.2% 5.0% -1.3% 11.2% invested in target-date funds (see Holden et al. 2014b). At year-end 2007, 67 percent of plans in the EBRI/ICI 401(k) — so that all decisions that relate to employee benefits, whether made in Congress or board rooms or funds’ target dates. For target ? 401(k) participants -date funds, tend to concent investors were assumed to be in a fund rate their accounts in equity securi whoset target date was nearest to their ies. The asset allocation of the of theChanges in Co fund, which is nsistent 401(k usually included in ) Participan the fund’s nam ts’ Allocations e. Non to -Target target-date ba -Date Funds lance ................................................... d funds include asset allocation or . 15  2007 2008Subscriptions 2009 to EBRI Issue 2010 Briefs are incl2011 uded as part of 2012 EBRI members2013 hip, or as part of a 50s 7.1% -2.0% 5.1% 2.8% 0.8% 7.9% Ch 10 to an 20 years ges in Co of t nsisten enurte at 401( year-end 2013, k) Participants’ Allo older catio partici nsp to ants Targ ten et-Date ded to F have und hi s gher balances than younger participants: a give Issue Brie O n perc rde entage fr , no s/. 40 pro2 duce (July larg ). Aer vailable dollar at increas wwwe.ici.org/ s (or de pd crea f/pe ses) when comp r20-04.pdf and ounded on a larger asset base. In other sample), which removes the effect of participants and plans entering and leaving the database. Initially, this group was target-date Among consist fund assets r A elnt 4 l 01(k) par elat 14. ive to th t6% icipants e ot bethe ween y r investments -7.1%ear-end 200 in th 7. 7 a 5% e 4 n0 d year 1(k) account, -en 5.d 7% 2013, whic few moved to h depe -1.4% nds oward, or 13. n the re 2% lative away from, 10). The dowfamilies’ nward movem homee s, nt are was conc basede on the highe n 27trated amonst g partic qualitiy, pants most depe in their nda 50s a ble nd 6 informatio 0s, while n. th EBRI’s Web e fraction hol site ding posts database offered target-date funds in their investment lineups, 25 percent of 401(k) participants were holding target-date 4.2 million 401(k) plan participants in Median $199 annualthe co subscnsistent group ription to EBRI was broadly similar Notes and EBRI Issu to the asset allocation of the 26.4 mil- e Briefs. Change of Address: EBRI, hybrid f 65th birthday. 20 unds, 07 iThe equity n addition 2008 to portio lifestyle n was estimated using the i fun 2009 ds. Company stoc 25% 2010 ndust k is equity i ry a20 verag 11 n e equity perce the 401(k) pla 2012ntage for the a n’s sponsor 2013(t ssigned target-date he employer 2014). 42% 24% 60s 7.7% -2.1% 5.6% 3.4% 1.3% 9.0% Evidence of Reallocation Activity to or from Target-Date Funds Among Consistent 401(k) Participants ................... 17  those in their 30s with 10 to 20 years of tenure had an average account balance of $88,298, compared with an average words, growthS rates ar ource: Tabul e a ati fu ons from nction o EBRf I/ th ICI P e r arti e clative si ipant-Directed R ze ofe the tireme dollar nt Plan D adju ata C stment to th ollection Project. e size of the individual account. www.ebri.org/pdf/briefspdf/EBRI_IB_402_July14.K-Longit.pdf Betwe performa demogra en year- p nce hic o all alend fly similar to stocks versu resea 2007 rch an finding th d se ent year-en fixes, d-income ire E publi d B 20 RI/ICI 4 c13 ations, securiti , consistent 01 an (es, in k) dat d ne 40 ws addi a1(k base at alert tio ) pa n to sr year . tiEBRI also exte rea cipa -llocation a n end ts’ u 20 se 07. ofctivity by Ho ta nds rge wever, its e t-daparticipa t by y d eu fc ua nd ea tion s in rn -en ts. Although and pu cd re 201 ased sl 3, t blich i ghtl se ese rvice y, equiti these e esx w treme as little cha s of equity nge hol d am dings; ong thos 1100 in addit e13t inh their ion, ther St. N 3 W 0s e , an S was uid te 40s only a 878, (more t W slight ashing ha tnet moveme on, n 9D 1C, perce 20005 nt i nt -4051, towar n both (202) d years reduc 659 ),e -0670; and d ex e posure t d fag xe num d up o be a 28 r, bit funds, and 7 percent of the a EBRI/ICI 401(k)ssets in the dat Database¹ abase were invested in target-date funds (see Holden et al. 2008). fund calculated lion participants in the entire using the 27%Morningstar Lifecy year-end 2013 cle Allocatio EBRI/ICI n Index. 401(k ) database. On average at year-end 2013, about two- Money f Sunds ubs cc onsist of those riptions fun ds designed to maintain a stable share price. Stable-value products, such as GICs Note: Equities include equity funds, company stock, and the equity portion of balanced funds. The consistent sample is the All 9.0% -2.8% 6.2% 3.0% 0.2% 9.2% of $141,981 for participants in their 60 with 10 to 20 years of tenure (Figure 5). Among consistent participants in their role to improving Ameri (202) can775 s’ finan -6312; cial e-kn mail: owle subs dge crip thro tions ugh @ebri its a .org w ard M -win embe ning rship publi Infor c se mat rvice ion: cam Inquipaign ries with partici Target fe pw ants h -Dat partie ad cipants movin Fund Use Rose grown oldeg r, accrue into Substantially in or o d ulon t og f these er job te the Entire E funds. nure sAt year- , and BRI/ICI accumu end 401(k 2007, lated larger ac ) Database 27.1 perc................................................ ent of count consiste balancesnt 4 compare 01(k) d with 18  information equities. For on ex speci ample, Consist fic tra ent Sampl anad lyzing the ing activity e² gro of up of co 401(k) nsistent participa401 nts is not ava (k) participants at year ilable in the EB -end RI/ICI 2013, 40 t1(k he )data s database, how tha it is t among participants in their 20s 29 (from 86.7 percent at year-end 2007 to 89.9 percent holding equities at year-end Sources: Bloomberg, Bar 4.2 m clay illion 401(k s Global Inv)es plan participants w tments, Frank Russell Com ith acc pany ount balances at the end of each y , and Standard & Poor's. ear from 2007 through 2013. Funds include Altogethe thirds of 401(k) participants’ assets were inv r, from year-end 2007 ® through year-end 20 ested in equi 13, the avera ties, either through equity f ge account balance amon unds, g th the equity por e group of consis tion of tent and other stable value funds, are reported as one category. The other category is the residual for other investments, Source: Tabulations from reg E ardi BRng I/IC E I P BRI articip m ant-D embe irected R rship a end/ tirem or ent P cont lan D ribut ata C ions oll etcti o oE n P BRI roject -ERF should be directed to EBRI 23 Holden, 1 Sarah, Jack VanDerhei, Luis Alonso, Steven Bass, and AnnMarie Pino. 2014b. “401(k) Plan Asset Allocation, ChoosetoSave and the companion site www.choosetosave.org 60s at All index year-en es are set to 100 i d 2013, those n December 2006. with five to 10 years of tenure had a lower average 401(k) balance ($92,112) than those 11 mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested For the complete update from the year-end 2013 EBRI/ICI 401(k) database, see Holden et al. 2014b. partici possible to particip pants h ants i observe activity ne the year-en ld at least some target-d d into or out 2013 cross section. of zero or ate fund invest 100 per ments in cent in their vestment in 401(k) acco target-da unts, and t te funds hat sh at year-en are increased d. slightly 201 1.4 3). perc Th ent, o e den cline net, in t moved he ow to a z nership of ero equit equies allocatio ities among ol n—8.6 der p perc artici ent pant of this s is consistent group had with no e standard fina quities at year 30 ncial -en advi d 200 ce 7 For a description of the inves tment options, see page 21. About the EBRI/ICI Database ................................................................................................... 19% 18%............................ 21  participants increased by 86 percent, rising from $79,882 at year-end 2007 to $148,399 at year-end 2013 (Figures 4, 5, 2 target-date fun Note: A d target-date fund, w s, the equity Pre portion of non-target-d sh ide ether a m nt Dalu la tual fund, bank s Salisbury a col ate balanced fu t tlhe ecti a vbove e trust, l addre ife innds, or co s surance separate account, or other s, (202) 659 mpany stock. Younger 401(k) -0670; e-mail: salisbury@ebri.org such as real estate funds. The final category, unknown, consists of funds that could not be identified. The S&P 500 index i m n the securi easures the per ty ifor ndi mcated. A ance of 500 s ge group i tocks chos s based on the parti en for market size, liquidity cipant's age at y , and industry gr ear-end 2013. oup representation. Account Balances, and Loan Activity in 2013.” ICI Research Perspective 20, no. 10, and EBRI Issue Brief, no. 408 with more than 30 years of tenure ($295,747). 14 $75,359 to 30.4 percent at year-end 2013, with the growth occurring across all age groups (Figures 14 and 15). In both years, and 10.0 percent ha pool d 16% ed i no nvestm equities at ent product, ty year-end 20 pically rebal13 ances i (Fi ts portfo gure 12 lio to becom ). This e l net ch ess focused on grow ange reflects 3.2 th and mo perce re focused nt moving from zero emphasizing decreasing investment risk as individuals approach retirement. 3 $10 million or Less >$10 million to $100 million More than $100 million All and 24 The Rus 6). T se participants tend to his tr ll 2000 index anslates into measures the per a have for compou mance of the 2,000 s higher co nd an ncentratio mal nual av lest U.S. coerage mns in equities than older 401 panies (bas gred on total owth rate of 10. market capitalizati 9 on) percent i(k) participants. ncluded in the Rus over the six-y sell 3000 index ( e war perio hich tracks the 3,000 l d. The argest Sources and Types of Data ..................................................................................................... $62,205 .......................... 21  12 EBRI is supported by organizations from all industries and sectors that appreciate the value of (December). Available at www.ici.org/pdf/per20-10.pdf and The EBRI/ICI 401(k) databas on income as it approaches and passes the target date of e environment is certified to be fully compliant with the ISO the fund, which is usually included in the fund's nam -27002 Information Security Audit e. Among consistent 401(k) participants between year-end 2007 and year-end 2013, few moved toward, or away from, Age and Tenure of Consistent 401(k) For an analysis of contribution activity during the bear mar Participants ket of 2000–2002 us $52,465ing the cross-sectional EBRI/ICI 401(k) U.S. c Ed om itpani oria esl) .B oard: Dallas L. Salisbury, publisher; Stephen Blakely, editor. Any views expressed in this publication and those of the authors should younger 401(k) participants were more likely to hold some target-dat $49,711 e f 28% und investments, compared with older equities to at least some, 4.6 percent moving from some to zero, and 5.4 percent sticking with zero holdings in both median account balance among this consistent group also grew, rising 141 percent from $31,224 in 2007 to $75,359 in The consistent sample is 4.2 million 4$40,116 01(k) plan participants with account balances at the end of each year from Plan Assets 4 unbiased, reliable information on employee benefits. Visit www.ebri.org/about/join/ for more. not be ascribed to the officers, trustees , members, or19% other sponsors of the Employee Benefit Research Institute19% , the EBRI Education and standard. More www.ebri.org over, EBRI has obtained a /pdf/briefspdf/EBRI_IB legal opinion that the methodolo _408_Dec14.401%28k%29-up gy used date.pdmeets f the privacy standards of the Gramm- these e Investment O Formerlx y the Lehm tremean Br s of e pother tions $31,224 q s U.S. Aggr uity ............................................................................................................ hol egate Bond I dings; in ndex addit , the Barcion, ther lays Capital U.S. Aggr e was egate Bond I only sli ndex ght is c ne omt movement posed of securities c t ovo erward incr ing government and c eased ............................. 21 orporex ate bonds posure t , mortgage- o   All age ? grou Equi ps in t ty hol hd e sam ings by ple consi of consiste stentnt 401(k 401(k) pa ) part rticipants moved a icipants increased way from slightly hi among gh or f y ullo allocati unger p ons to e articipq ant uitise and s databases, see Holden and Va 14% nDerhei 2004. The analysis finds that, overall, 401(k) participants’ contribution rates were little participants: 42.1 percent of consistent 401(k) participants in their 20s had target-date funds in their 401(k) accounts 2007 and 2013. Whil 2007 through 2013. A e younger 40 $25,133 1(k ge group i ) par st based on the parti icipants wereci more like pant's age at y ly to ear-end 2013. move to holding some equities than older 401(k) At year-end 2007, the consistent group was similar in age to the participants in the entire EBRI/ICI database. For backed securities, and asset-backed securities (rebalanced monthly by market capitalization). The index's total return consists of price appreciation/depreciation plus income as a percentage of 2013 Re (a com search Fp uound annu nd, or their sta al a ffs. v Nerage gro othing herein w ith s to rate o be consft r15.8 percent ued as an attemp)t t(Fi o ag idur ore 4). hinde r the adoption of any pend $18,433 ing legislation, regulation, $18,942 $17,794 $17,686 $17,630 15 $12,655 $16,649 Leach-Bliley Act. At no time has any nonpublic personal information that is personally identifiable, such as a Social Security target- the origid nalate decreased s inve f S sto m u urce: I ent. nds. For CI tabu li e lati gx htly ons am of ple, fo U.S r o . Departme analyz lder partici ing nt of the Labor Form pgroup ants 5500 . of High R c es o earch allocations to equities droppe nsistent 4 File . 01(k) participants at year d for both groups from -end 2013, the data 2007 to show changed in 2 between year 00 -end 2007 an 0, 2001, and 2 d 002 when compared to 1999. On aver year-end 2013, with older participants age, 40 gene 1(k) participants’ cont rally moving more than ribution behavior does not younger ones. For at year- Refer oences r inen terd 2 p ............................................................................................................................... ret013, ative compar rule, or as e ld e w galith , acc28. oun8 tin pe g, rcent o actuarialf, consis or othertent such4 p0 ro 1f(ek) pa ssionarticipants l advice. ww in t w.e hbri eir 6 .org 0 s. Never........................... 22 theless, the largest   participants, older 401(k) participants displayed slightly higher reallocation activity toward a zero equities allocation. example, 37 percent of the participants in the consistent sample were in their 20s or 30s in 2007, which is the same for Holden, SarahCo , Jack Va nsistent SanDer mple in 200 hei, Luis 7 E Alons BRI/ICI 4o 01( , and Crai k) Database in 200 g Copelan 7 Cd o. ns2008. “401(k) Pla istent Sample in 2013 n EAsset Allocatio BRI/ICI 401(k) Databas n, Account e in 2013 number, been transferred to or shared with EBRI. that 3.3 percent, on net, moved away from a zero target-dat e funds allocation—72.9 percent of this group had no example, 2013. 59.8 percent of consistent 401(k) participants in their 20s ha 6 d more than 80 percent of their account invested appear to have been materially affected by the bear market in equities from 2000 through 2002, whether measured in dollar movement toward target-date fund use over the period occurred among consistent 401(k) participants in their 40s, 50s, Among th Some of the e co ansistent gro ctivity of older up, individu participants al 40 c1(k ould ) partici have be pan en ts experienced a in anticipation of retirem wide range of ent rather tha outcomes, often influenc n in response to ed by the 21.8 million part 2007icipants in th 2008 e entire database 2009 (Figure 1 2010 ). Thirty-fiv 2011 e percent of t2012 he participant2013 s in the consistent Endnotes ...................................................................................................................... ...................................... 24  Balances, and Loan Activity in 2007.” Investment Company Institute Research Perspective 14, no. 3, and EBRI EBRI Issue Brief is registered in the U.S. Patent and Trademark Office. ISSN: 0887 ?137X/90 0887 ?137X/90 $ .50+.50 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. target-date funds at year-end 2007 and 69.6 percent had no target-date funds at year-end 2013 (Figure 16). This net in equiti amounts or percentage of sala es at year-end 2013, compared ry they contributed. with 61.3 percent at year-end 2007 (Figures 10 and 11). Those figures include and 60s, and was lowest among those in their 20s. the re 25 financilationshi al market movements p among the t.h Indeed, ree factors m household survey i entioned abovn e: fo contributions, investment rmation indicates that households a returns, an nd ticwithdra ipate rebalanci wal/loan n g sample were i Source: T Nn ote: their 40s i abulations from EBR The EBRI/ICI 401(k) n 2007, I/IC database I Participant-D whil contains e irected R 30 percent 21.8 million etirement Plan D 401(k) of partic plan participants ata Collection Project. ipants at year-end in t2007 he e and 26.4 million ntire data at base year-end were 2013. Participant in their tenure 40s. is Twenty-nine ? More consistent 401(k) plan participants held target-date funds at year-end 2013 than at year-end Issue Brief, no. 324 (December). Available at www.ici.org/pdf/per14-03.pdf and Account balances are net of unpaid loan balances. Thus, unpaid loan balances are not included in any of the eight asset 1 tenure as of the year-end indicated.The consistent sample consists of 4.2 milli th on 401(k) plan participants with account balances at the end of change reflect The s year-end 2013 EBR 11.2 percent I/IC 19 I 401 moving from (k) database represents 26.4 million 401 zero target-da (k)p te lan fu partici nds to pants. at least some, 7.9 percent moving from some to 12.7 percent of consistent 401(k) participants in their 20s who had 100 percent of their account invested in equities at 1100 13 Street NW · Suite 878 activity. Partici their portfol 2 ios as they pants who age. were youn ger or had fewer years of tenure experienced the largest percentage increases in each year from 2007 through 2013. Components may not add to 100 percent because of rounding. percent of the participants in the consistent sample were in their 50s or 60s, compared with 32 percent of participants 200 The consistent sample is 4.2 million 401(k) plan participants w 7, on net; many of those with targ ith account balances at the end of each y et-date funds held all of ear from 2007 through 2 their 401(k) 013. account in target-date categories described. www.ebri.org/pdf/briefspdf/EBRI_IB_12a-2008.pdf © 2015, Employee Benefit Research Institu Washington, DC te ?Education 20005 and Research Fund. All rights reserved. Note: Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of plan loans. Retirement savings year-end 2013, compared with 14.1 percent fully invested in equities at year-end 2007. At the other end of the age in the EBRI/ICI database overall. funds. held in plans at previous employers or rolled over into IRAs are not included.(202) 659-0670 www.ebri.org www.choosetosave.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org A monthl ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org Issue Brief • September 2015 • No. 418 ebri.org Issue Brief • September 2015 • No. 418 ebri.org Issue Brief • September 2015 • No. 418 ebri.org Issue Brief • September 2015 • No. 418 ebri.org Issue Brief • September 2015 • No. 418 ebri.org Issue Brief • September 2015 • No. 418 ebri.org Issue Brief • September 2015 • No. 418 ebri.org Issue Brief • September 2015 • No. 418 Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri Issue Bri y research report f e e e e e e e e e e e e e e e e efffffffffffffffff • September • September • September • September • September • September • September • September • September • September • September • September • September • September • September • September • September rom the EBRI Education and Re 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 2015 • No. 418 search Fund © 2 015 Em ployee Benefit Research Institute 19 12 20 13 16 7 5 9 15 17 14 25 23 11 24 22 26 10 21 18 2 4 6 3 8 Figure 9 Average Asset Allocation of 401(k) Accounts by Participant Age Percentage of account balances, year-end 2007 and year-end 2013 Figure 15 Year-End 2007 Younger 401(k) Participants Have Higher Concentrations in Target-Date Funds Figure 6 2, 3 Target-date Company Memo: Equity Non–target-date Bond Money GICs and other 1, 2 2 4 Asset allocation distribution of 401(k) participant account balance to target date funds by age, percentage of participants, ye funds Changes in 401(k) A funds ccount B balanced funds alances Among C funds onsistent 401(k) Par funds stable-value funds ticipants from 2007 Thr stock ar-end 2007 and year-end 2013 ough 2013 Other Unknown equities Age Group Percent change in average 401(k) account balance among 20s 37.7% 25.2% 8.3% 4.9% 3.8% 6.9% 11.6% 0.8% 0.8% 76.7% Percentage of Account Balance Invested in Target-Date Funds at Year-End 2007 consistent 401(k) participants by age and tenure, 2007–2013 30s 53.8% 11.2% 7.5% 7.0% 2.9% 4.5% 11.4% 0.9% 0.7% 79.3% Age group Zero 1 to 20 percent >20 to 40 percent >40 to 60 percent >60 to 80 percent >80 percent Compound Annual 40s 57.2% 7.7% 6.8% 7.2% 2.8% 4.8% 11.6% 1.3% 0.6% 78.5% 20s 58.6 3.5 3.2 2.8 2.5 29.5 Age Tenure Average Growth Group (years) 2007–2008 2008–2009 2009–2010 2010–2011 2011–2012 2012-2013 2007–2013 Rate, 2007–2013 50s 30s 51.3% 6.9% 67.2 7.5% 6.9 7.8% 3.6% 4.4 7.6% 3.1 13.0% 2.5 1.9% 0.4% 15.8 72.8% 20s All 41.4% 120.2% 50.5% 17.9% 33.4% 34.7% 893.7% 46.6% 40s 73.4 7.7 4.2 2.7 1.9 10.2 60s 45.9% 7.9% 8.1% 9.0% 5.5% 10.3% 10.7% 2.1% 0.4% 64.7% >5 to 10 48.9 128.6 51.6 19.0 34.0 35.1 1,011.5 49.4 5 All Consistent Sample 50s 51.3% 7.5% 75.3 7.5% 7.5 8.0% 4.1% 4.0 7.5% 2.6 11.9% 1.7 1.8% 0.5%8.9 72.1% 30s All -15.8 69.4 32.1 8.8 25.0 29.6 232.3 22.2 6 EBRI/ICI 401(k) Database 60s 74.7 7.2 4.0 2.7 1.7 9.6 48.2% 7.4% 8.0% 8.3% 4.2% 10.6% 10.6% 2.1% 0.7% 68.0% >5 to 10 2.4 97.2 41.0 13.5 29.5 32.7 455.3 33.1 1 All consistent sample >10 to 20 -23.1 72.9 57.4 7.326.5 5.94.1 21.7 2.7 27.1 150. 1.9 7 16.6 11.0 Year-End 2013 2 40s All -26.3 51.7 22.9 4.6 19.7 26.1 116.8 13.8 2007 EBRI/ICI 401(k) database 74.9 6.3 4.0 2, 3 2.5 1.6 10.9 Target-date Company Memo: Equity Non–target-date Bond Money GICs and other >5 to 10 -8.4 83.7 35.8 11.2 26.5 30.2 318.3 26.9 1, 2 2 4 funds funds balanced funds funds funds stable-value funds stock Other Unknown equities Age Group Percentage of Account Balance Invested in Target-Date Funds at Year-End 2013 >10 to 20 -28.0 53.0 22.1 4.1 19.5 26.1 110.9 13.2 20s Age group >20 t 36.1% o 30 -29.5% 29.4 Zero 40.9 9.4% 1 to 20 percent 17.8 5.1%>20 to 40 percent 2.42.1% 16.2 >40 to 60 percent 3.2% 23.2 10.4% >60 to 80 percent 71.8 1.8% 9. 2.5% >80 percent 4 78.6% 50s All -27.1 40.9 18.2 3.3 16.0 21.7 77.0 10.0 20s 57.9 5.0 3.5 3.0 3.4 27.1 30s 49.4% 16.8% 7.7% 6.7% 2.7% 3.4% 8.9% 2.5% 2.0% 77.9% >5 to 10 -8.6 74.7 33.6 11.6 25.0 28.4 282.0 25.0 30s 65.1 7.4 4.5 3.1 2.9 17.0 40s 51.8% 11.9% 6.9% 7.6% 3.2% 4.4% 9.4% 3.0% 1.8% 75.2% >10 to 20 -26.9 49.0 20.7 4.5 18.3 23.7 101.2 12.4 40s 69.8 8.4 4.5 3.0 2.4 11.9 50s >20 t 44.5% o 30 -10.9% 29.3 38.7 7.2% 15.6 9.2% 1.84.6% 14.88.2% 20.8 10.0% 59.9 3.8% 8. 1.5% 1 66.1% 50s 71.0 8.3 4.4 3.0 2.3 11.0 >30 -27.6 33.3 15.2 2.5 12.8 18.2 52.0 7.2 60s 38.0% 11.7% 7.2% 10.9% 6.8% 11.9% 8.5% 3.6% 1.3% 55.8% 60s 5 All -25.1 33.8 14.3 1.1 10.5 13.4 45.0 6.4 60s 71.2 7.5 4.2 3.0 2.2 12.0 All Consistent Sample 45.6% 11.9% 7.2% 8.9% 4.6% 7.5% 9.4% 3.4% 1.6% 67.8% 1 >5 to 10 -6.3 66.3 30.2 11.1 20.8 21.8 231.5 22.1 All consistent sample 7 69.6 7.9 4.4 3.0 2.4 12.7 EBRI/ICI 401(k) Database 43.5% 15.3% 7.3% 9.1% 4.4% 7.0% 7.3% 4.0% 2.0% 65.5% >10 to 20 -24.2 42.9 18.3 3.3 13.8 16.5 75.7 9.8 3 2013 EBRI/ICI 401(k) database 58.8 5.2 3.3 2.6 2.1 27.9 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >20 to 30 -27.0 33.6 12.8 0.1 10.0 12.3 36.1 5.3 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 1 >30 -26.4 28.6 11.1 -0.7 7.6 10.6 24.3 3.7 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. 1 2 The consistent sample is 4.2 million 401(k) plan participants with account balances at the end of each year from 2007 through 2013. All All -25.8 42.9 19.3 3.6 16.4 21.8 85.8 10.9 Not all participants are offered this investment option. 2 3 The year-end 2007 EBRI/ICI 401(k) database represents 21.8 million 401(k) participants. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project GICs are guaranteed investment contracts. Note: The consistent sample is 4.2 million 401(k) plan participants with account balances at the end of each year from 2007 through 2013. Age and tenure groups are based on participant age and tenure at year- 3 4 The year-end 2013 EBRI/ICI 401(k) database represents 26.4 million 401(k) participants. Equities include equity funds, company stock, the equity portion of target-date funds, and the equity portion of non-target-date balanced funds. end 2013. The "all " category includes participants with missing tenure information. Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of plan Note: A target date fund, whether a mutual fund, bank collective trust, life insurance separate account, or other pooled investment product, typically rebalances its portfolio to become less 5 loans. Retirement savings held in plans at previous employers or rolled over into IRAs are not included. Asset allocation by age group is among the consistent sample of 4.2 million 401(k) plan participants with account balances at the end of each year from 2007 through 2013. 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. Age group is based on the participant's 6 The year-end 2007 EBRI/ICI 401(k) database represents 21.8 million 401(k) plan participants. age at year-end 2013. Row percentages may not add to 100 percent because of rounding. 7 The year-end 2013 EBRI/ICI 401(k) database represents 26.4 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. Age group is based on the participant's age at year-end 2013. Row percentages may not add to 100 percent because of rounding. Percentages are dollar-weighted averages.

Volume 418

Pages 28

EBRI Issue Brief

Jack VanDerhei

Sarah Holden

Luis Alonso

Steven Bass

Retirement