This paper provides an update of a longitudinal analysis of 401(k) plan participants drawn from the EBRI/ICI 401(k) database.
Because the annual cross sections cover participants with a wide range of participation experience in 401(k) plans, meaningful analysis of the potential for 401(k) participants to accumulate retirement assets must examine the 401(k) plan accounts of participants who maintained accounts over all of the years being studied (consistent participants). For example, because of changing samples of providers, plans, and participants, changes in account balances for the entire database are not a reliable measure of how individual participants have fared. A consistent sample is necessary to accurately gauge changes, such as growth in account balances, experienced by individual 401(k) plan participants over time.
A few key insights emerge from looking at the 1.9 million consistent participants in the EBRI/ICI 401(k) database over the eight-year period from year-end 2010 to year-end 2018.
- The average 401(k) plan account balance for consistent participants rose each year from 2010 through year-end 2017 before edging down in 2018. Overall, the average account balance increased at a compound annual average growth rate of 13.9 percent from 2010 to 2018, rising from $63,756 to $180,251 at year-end 2018.
- The median 401(k) plan account balance for consistent participants increased at a compound annual average growth rate of 17.3 percent over the period, to $90,015 at year-end 2018.
- The growth in account balances for consistent participants generally exceeded the growth rate for all participants in the EBRI/ICI 401(k) database.
Younger 401(k) participants or those with smaller year-end 2010 balances experienced higher percent growth in account balances compared with older participants or those with larger year-end 2010 balances. Three primary factors affect account balances: contributions, investment returns, and withdrawal and loan activity. The percent change in average 401(k) plan account balance of participants in their twenties was heavily influenced by the relative size of their contributions to their account balances and increased at a compound average growth rate of 39.9 percent per year between year-end 2010 and year-end 2018.
401(k) participants tend to concentrate their accounts in equity securities. The asset allocation of the 1.9 million 401(k) plan participants in the consistent group was broadly similar to the asset allocation seen in the annual EBRI/ICI 401(k) database updates. On average at year-end 2018, about two-thirds of consistent 401(k) participants’ assets were invested in equities — through equity funds, the equity portion of target-date funds, the equity portion of non-target-date balanced funds, or company stock. Younger 401(k) participants tend to have higher concentrations in equities than older 401(k) participants.
Figure 4 Consistent 401(k) Participants Accumulate Significant Account Balances Sa Inves Bac In End Fi the Ref Plan Sponso By year g other ure 5, mple database, ere kgro n tm ot - w ent en n 401( es or d 2 ces of und rr d e Council s 01 turns k) C a p , g P 8onsi rowth artic ,Fac lan the , w of Acc ip h consi to stent 401 rate ich Am ant’s oru v s I erica. nt Bal s s ary account are tent sam nf wa a ith 20 luen nces A fu 1 401(k (k b nctio 9 pl . al e ) P ci 6 an mo 2nd of n ng )ce p articipants, of 4 ng 01 lan Annu is r the 40 Co ( account k) ed rel nsis 1(k) al uc part ati S ed tent 401(k uive size rvey cipan in the Pl ass an of et all 20 ts of year a Profit )10 Ass lso the P ocat ar tha was – ticipants Sharin ets doll i201 on, also i t the loan ol ar de 8 g adjus r, a ................................ on a nd nfl i tm u 4 se or 01 verage, ent nce (ig k) inat to t th Plans: e comp he ed changes , sbu ize Rared with efl t of r........................... ecti ep i tn he ind aym ng 2 partici ent p 0ivid arti 18 of pa ual cipan Plan nts the ’ ts 9 Figure 10 Sarah Holden is Senior Director of Retirement and Investor Research at the Investment Company Institute (ICI). Jack What Does Consistent Participation in 401(k) Plans About the EBRI/ICI 401(k) Database Average 17 This system of classification does not consider the number of distinct investment options presented to a given participant, lo in acco acco an the unts. unt. ine th ntire Experi e Alth e EBRI/ nsough ence uing ICI ass .y C ears 401(k hicag et allo coo: ) ntribu cation vari P database. lant S es to ponsor F ed ac o w r ex count Cou itham a nci ge growth. pll e, , a of f America. nd ewer many than partici 0.5 pe pants rcent of held the a ra p ng artic e of ip ants invest in ments the consis , stock te nt g mark ro et up VanDerhei is Director of Research at D o the me s Em tic pl oy Sto ee Ben ck aefi nd t Researc Bond hM Ia nst rk itute (EBRI et Index) e. Steven Bas s s is an economist at Allin Agg Among re g,gate B th ria e 40 d n T at., Jeff 1(k a on 40 ) partici rey W. C 1(k) pan pllark, an ans provi ts with accoun d de Dav in id sts ig Sti at ht int nnett. the o th e 2 ne 0 d of 201 20 poss . Ho ibw le inf 0 Am in th lue ereica nce EBRI/I Saves of ea CI ch o 202 401 0. f( the k) Va d f lley For atabas actorse th g, e, P 1.9 at cause A: mi The V llion chan are ang ge iuar n st he in d Generate? Changes in 401(k) Plan Account Balances, 2010 – The EBRI/ICI project is unique because of its inclusion of data provided by a wide variety of plan recordkeepers, Fi gure 6, Changes in 401(k) Plan Account Balances Among Consistent 401(k) Participants ................................ $181,492 ........ 10 but ra 1 ther, the types 3 of options presented. Plan Sponsor Council of America 2019 indicates that in 2018, the a $180,251 verage number pe were rform in the ance ir t twen endsti to es an have d 1 an 4 pim ercent pact on wer te hese in the bal ir anc thies be rties at year cause, i -e n nd 201 large part, 8 (Figu 401( re k) 1). In plan t p he enti articipan re EBRI ts’ bal /ICI ance 401(k s ) Because of these chan EBR ges in I/ICI 401( the cross secti k) Database ons, comparing average account balances across different year-end cross- acco ICI. This consunt istent bal G Is roup, ssan a ue mple. ces BVa rie : contri ngu f The was ard s bu e writ C ti center ons ons ten ist , iwith as f nves ent or R part tm etir se ist iement nt retur cipan ance ts Res from th ns, had earch. Avai an ac d ecounts In withd stitute r at lawal abl’s res th e at e end or loan earch a of activit each nd e y. ydi ear f tBetw orial staffs. rom een 201 year An 0 throu -en y views d 20 gh10 201 ex apre nd 8; they ye ssed ar - 1 of investmen Altogethe pe 2018 Russ rmitt ell in 2000 i g r, fro t Mhe t f onnd an un tm year h-e ed opti alys n x. d T leis of acom - vons av end 2 el th a, WA: Fra 01 e ailabl activ 0 throu e f ity o or parti nk R gh year f participants uss cipan ell -end 201 t co Com ntributio ipa n 401(k) 8n , y. the ns was avera plans o ge 19 among the 4 f 01 var (k) yin p g lan s iz 608 acc es plans s — ount balanc from urv very eyed e a large co . B mo rightScope an ng t rporati he group ons d to of sectio nal snapshots can lead to false conclusions. For example, newly formed plans would tend to pull down the average tende database d to at bey wei ear-gh end 201 ted Con to sisw 8 ten ,ard t pre Same pl liminary qu e ities. a Analys ltogeth is fi er, at nds 14 year percent -end 201 of part 8, eqicip uities ants — w eeqre i uity f n the und ir st , t we he nties an equity dportion 24 percent of in this report are those of the authors, and should not be ascribed to the officers, trustees, or other sponsors of EBRI, end 2017 make up https: a ( l the on gi //inst lates tudin t itut data al ional.vang samp availab le, wluar e) hich , d.com/n contr remiov bues the ef gi tions am/ to as 401 sfec etst of partici /p (k) df/has plans have /hpan ow-ts ameri averag and ca pl- ed asns e aves $352 nterin -report billg ion - an 2 a 02 d le y0. ea aving pdf r, and b . the data enefits base. paid Fi gure 7, Average Asset Allocation of 401(k) Plan Accounts by Participant Age ......................................................... 11 October 1, 2020 320 • No. 514 Investment Company Institute 2020 reports an average of 28 investment options in 2017, and an average of 21 investment small businesses — with a variety of investment options. consistent participants more than doubled (increasing by 183 percent), ri 8sing from $63,756 at year-end 2010 to account balance but would tell us nothing about consistently participating workers. Similarly, the aggregate average account were target i-ndate the ir fu tnd hirties. s, theThi equit rty-y p seven ortion perce of no nt of n-targ the partici et-datep b ants alance in d the co funds, nsis and tent sam compple w any st ere ock in — their rep res fiftiees an nted about d 21 two- $151,694 ( Initiall EBRI inclu-ding ER y, t F, his roll or g the ov roup was ers ir s ) h taf ave fs. N de a m verage eiographica ther EB d $ RI 346 lly nor sbi imilar to t EBRI llion (Fi -ER gu he e F rlo e 8) bbies ntire . Invest or EBRI/ICI tak men es pos t returns 401( itions on sp k) d — ata int bas erest ecifi e at year c, p di ol viicy p de -en nd ds, and rea ropos 2010. Ho als. EBRI invites we lizever, by d and By Sarah Holden, ICI; Jack VanDerhei, EBRI; and Steven Bass, ICI 300 401(k) participant analysis S& optP ions whe 500. Ne n a w York: Sta target-date fu ndarnd d & suite is co Poor’s. unted as a single investment option. balan $181,4 ce wo 92 at y uld tend to be pu ear-end 2018ll ( ed dow Figures 4, n if a 5 la , and rge n 6). T umbe his r of trpartici anslatpan es into ts retire and a compou 9 rol nd an l over nual their acco averag un e growth t balances. rate of 13.9 Barclays Capital U.S. Aggregate Bond Index. San Francisco: Barclays Global Investors. pe thirds rcent ofwere cons in the istent ir 401 sixti (k) es, plan partici compared wit pants h’ 2 as 5 spe etsrce (Figu nt are 7 nd 13 , low peer rcent, panel). respect ively, in the entire database at year-end comment on 28 t 0 his research. unrealize year-end d 201 ass 8et apprec , these partic iatioin/ pan dep tsr h eciation ad grown — var olde y si r, accr gnifiued lon cantly from ger jo ye bar to year. tenures, and Foraccum exampl ulate e, on net th d larger account ey had nearly Fi gure 8, 401(k) Plan Contributions, Investment Returns, Benefits Disbursed, and Assets ......................................... 12 Figure 7 $133,456 Sources and Types of Data 18 percent over the eight-year period. The median account balance among this consistent group also grew, more than 2 Lifestyle funds 260 maintain a predetermined risk level and generally use words such as “conservative,” “moderate,” or $126,908 2018. Account balances are net of unpaid loan balances. bal no i anc mpa esct on com pare assets d with par in 2011 an ticipants d 2015, in but the p year rov- ide end d 20 a s1 ign 8 cro ificant ss sboos ection. t as the stock market rose sharply from 2012 U .S. Department of Labor, Employee Benefits Security Administration. 2019. Private Pension Plan Bulletin, Abstract of Average Asset Allocation of 401(k) Plan Accounts by Participant Age 240 Bloomberg Data. New York: Bloomberg L.P. The as “aggress tripling sfrom et all ive” in their na o $cation of 25,077 in me to i p 2 a0 rti 1cipan 0 ndicate the to $90,01 ts in th5 fun e c in ons d’s 201 risk level. ist 8ent (a com sample Lifes poun tyle fu var d an ied wi nual nds g th p average ene art rally are inc icip g ant rowt age, h luded in the rate a patt of ern 17 no . that 3 pe n-target rce also nt) i-s d ( o Fi ate bserv gure 4 ed ). Figure 9, Most 401(k) Plan Participants Are in Plans With Employer Contributions .................................................... 13 Introduction Suggested citation: Holden, Sarah, Jack VanDerhei, and Steven Bass, “What Does Consistent Participation in 401(k) Several through 3 EBRI and 2014, and in ICI mem 2016 a bers nd p 2017 rovide . In d r th ecords e same onpe acti riove p d, on arti aver cipa age, nts inv in 40 est 1(k ment r ) plaeturns have ns for which bee they ke n appt proxim recor ate dsly for 2017 Form 5500 Annual Reports (Version 1.0). Washington, DC: U.S. Department of Labor, Employee Benefits What Does Consistent Participation in 401(k) Plans This numbe 22r 0 is lower than it would have been if it merely ref $106,830 lected employee turnover and retirement. For example, if 401(k) Percentage of 401(k) plan account balances among consistent participants balanced fund category. in the cross-sectional EBRI/ICI 401(k) database. Younger participants generally tended to favor equity funds and target 14 Plans Generate? Changes in 401(k) Plan Account Balances, 2010–2018,” EBRI Issue Brief, no. 514, and ICI Research The EBRI equal to co /ICI 401(k) 2ntri 00 butions d . atabase, which is constructed from the administrative records of 401(k) plans, represents a large year-end 20 Security A 10 throu dmi gh nistr year ation ( -end 2018 September . The ). Avail se plan abl reco e at rdkeepers include mutual fund companies, banks, insurance plan sponsors change their service providers, all participants in those plans would be excluded from the consistent sample. Brady, Peter, and Steven Bass. 2020. “Who Participates in Retirement Plans, 2017.” ICI Research Perspective 26, no. 3 Among the consistent group, individual 401(k) participants experienced a wide range of outcomes, often influenced by Generate? Changes in 401(k) Plan Account Balances, 2010 – Year-End 2010 19 Fi date fun gure 10, ds, w Domes hile tic Stock older parti and cipan Bond ts were Mark mo et In re l de ike xes ly to ................................ invest in fixed-income ................................ securities such as bond fun ............................. ds, money 14 Consistent Participants Have Accumulated Sizable 401(k) Plan Account Balances 180 Age GICs are insu and Tenure rance co of mpan C y onsi products that gu stent 401 ara(k ntee ) a sp Parti ecific rate of cipants ret urn on the invested capital over the life of the Perspective, 26, no. 6 (October 2020). cro com ss pan section, ies, anor snapsho d consulting fir t, of ms 401 . Althoug (k) plans at th h the EBRI e end /ICI 401(k) of each ye par. It roject is h a ascro coll ssecte secti d data on of the from 1 entir 996 throu e populat gh ion 2018 of , the www.dol.gov/sites/dolgov/files/ebsa $83,75 /resea 5 rchers/statistics/retirement-bulletins/private-pension-plan-bulletins- 4 (May). Available at www.ici.org/pdf/per26-03.pdf. the relationship among contrib Ba utions, lanced inves Funds tm ent returns, and withdrawal or loan activity. Participants who were For the re1 port 60 on the year-end 2010 EBRI/ICI 401(k) database, see Holden et al. 2011. fun 201 ds, or guar 8 anteed investment contracts (GICs) and o $76, ther stab 293 le-value fun $7ds. 5,35 8 contract. Tren Contributio ds in the ns — cons S& whi P 5 ist 0c 0ent ²h pos gro itiup vely af ’s account fect 401( balances k) plan high acco ligh unt balanc t the ac $73, cum es 357 — ulation ef include b fect oth of em on pl goin oyer g an 40d 1(k em ) p plartici oyeepati on. At At year-end 2010, the consistent group was similar in a $72,383 ge to the participants in the entire EBRI/ICI database. For 401(k) plan participants, and it represents a wide range of participants — including those who are young and universe abstr of daact ta -provi 2017. de pd rsf v . aries from year to year. In addition, the plans using a particular provider can change over $69,118 Figure 11, 1 Les 40 s Than One-Fifth of Eligible 401(k) Plan Participants Have Loans Outstanding ....................................... 15 yo unger or had fewer years of tenure experienced the largest percent increases in average account balance between 2, 3 $63,756 5 $63,929 Copyright Information: This report is copyrighted by the Employee Benefit Research Institute (EBRI). You may copy, contributions, and $60, mos 329 t 401(k) particip No ants n-Ta are in plans rget- where the empl Goy ICs er co anntrib d utes. In 2017, 9 in 10 participants 20 year Tenu -en re re d 20 fers 18 , to 28 yea percent rs at th o e f curren the consis t emplo tenyer t grou and is gener p had more than ally derived f $20rom 0,000 in date of h theirire 401(k reported for the partici ) plan accounts atpan their t. Tenure example, BrightScope 35 a pnd ercent Inves oftm the partici ent $58,991 Company pants Inst in the itute. consis 2020 ten . T t he sample Bright were Scop ie/ICI n their D tw efin enti ed Cont es or thirt ributio ies i n Pn lan 201 Pro 0,fil simila e: A Clos r to 3 e 6 time. Re ind Other stable ividuals cor 1wh ds 20 -o are ne were value f eunds i ncry w to t pte nclude sy heir d to co jobs, nceal nthetic GICs, as well the ias de whic o ntld ity of er h co pa employers nsist of a portfol rticipants a and nd thos em io of fixed pl e oy who ees, h -inco av bue t me secu were been cod w riti ith e es d th “w seir o that rappe curr b d” wi ent ot h could th a By Sarah Holden, ICI; Jack VanDerhei, EBRI; and Steven Bass, ICI year Fi nall -en y, ld 20 oan o 10 and r with dra year wal a -endctiv 2018 ities can . For e hav xample, e an itmpact he aver on age acc 401(kount ) pla balance n account bala of 401( nces. k) p Althou articipants gh in in genera their thirti l, very es few Figure 9 Equity Target-Date Date Balanced Bond Money Other Stable- Company Memo: prin will not reflec t, or down t the load yea this re rs of pa porrtic t so ipati lely on in the 401 for personal (k) an plan d no n if 4 the 4 commercial 01(k) pl use, provi an was added b ded thy th at all e emplo hard cop yer at a ies retai later date n any and or if current were in e 401(k mp 10loyers 0) plans , while a where t nother he 15em 19 pl oy peer rcent made had between $100,000 and $200,000 (Figure 3). In contrast, in the pe gua rce ran nt of tee (typi participants cally by an in ins the uran entce co ire data mpan bas y or a ban e (Figure k) to 1). provi Thirty de ben -five efit pay percent ments of the partici according to pants the p in the lan a consis t booten k vt sam alue. ple employers Lo for ok at many 401( years k) Plans, 2 . For exam 017. pl San e, at Dieg year o, CA -end 2 : Bri 01 gh 8tSco , prelimi pe, and nary Was analys hingt is indica on, DC: tes In that vest14 ment Com percent o pan f 4 y Inst 01(k) itute. be tracked over multiple years. 1, 2For each partici10 pant, data include date of birth, from whic 2 h an age group is assigned; 4 Figure 11 Ageactiv ros Gro e ue p 450.8 401( k) pe r pl cent an Fun p d(s artic a 23ip .8 F a u nts pnercent ds take compo withF du rawals, n und ann ds ual partici Fun av dserage pants g F iun ro n th dwth seir s rate) Vixties ten alue be Fun td we sd en toS the h toave ck e a nd hoig f Oh 2 th er 0 e10 r pro and the pe Unnsity know e nto nd mak E of q uie ties Figure 8 there are restric M 80otio st ns on pa 401(krticipating in th ) Plan Parti e 4 ci01(k) pl pantsan A immedi re in ately u Plans pon h Wiire. th Employer Contributions all copyright and other applicable notices contained therein, and you may cite or quote small portions of the report contributions (Figure 9). Although this figure fell slightly broader EBRI/ICI 401(k) database, preliminary data indicate that 10 percent had accounts with more than $200,000, were in the Availab ir forties le at in w 2 ww.i 010ci.or , whi g/pd le 28 p f/20erc _ppr_ ent dcpla of part n_p icipa rofil nts e_401 in the ent k.pdf. ire database were in their forties. Thirty-one partici date 21 opan f hire, ts in fr the om w EBRI hich /ICI 401(k) a tenure rang date aba is s as e swer igned e i; n outs their tanding l twenties, oan b whil alance; e 13 p f ercen unds i t we n the re i p n art their icip sixties (F ant’s inves igu tm ree 1 n) t ; 20 Less T11 han One-Fifth of Eligible 401(k) Plan Some recordkeepers supplying data were unable to provide complete asset a Barclays Capital ll Uoc .S.ati on detail on certain pooled asset classes withd 2018 r(awals Figures 60 as5 the any a d 6). pp B roa ecch ause youn retirement. ger part icipants’ account balances tended to be smaller (Figure 5), their 401(k) Plan Contributions, Benefits Disbursed, 20s 24.4% 46.3% 3.4% 3.6% 5.2% 5.4% 9.1% 0.8% 1.8% 76.5% Percentage of active 401(k) participants in plans with employer contributions by plan assets, plan year 6 provided that you do so verbatim and with proper citation. Any use beyond the scope of the foregoing requires EBRI’s and in th 9 perc e wake ent of the had f be inancial tween $10 mark 0,0 et crisis 00 and , reachin $200,0g 00 a. l ow Aggregate Bond Index4 pe Th rce e cro nt of ss the -sect p io artic nal E ip BR ants I/ICI in the 401(k) databa consistent sample se also show A T wer A s tha e G int the yo L un ir Afger p ifti NesC a or rtic E s ipants a ixties, co nd th mpared ose w w ith shorter tenu ith 36 percent res ten of d to percent of participants had two or fewer Par years of ticipants tenur Haev at th e Lo eir an cs urre Ou nt jobs, tstan while ding 4 percent had more than 30 years portfolios; a40 nd asset values attributed to those funds. An account balance for each participant is the sum of the for one or more of their clients. The final EBRI/ICI 401(k) database includes only plans for which at least 90 percent of all plan contributions produced significant percent growth in their account balances. In contrast, the average account balance 30s 34.1% 34.7% 4.6% 4.9% 2.3% Inv 5e .7s %tment 1R 0.3e % turns 1,. 4a % nd As1 s .9 e % ts 77.4% prior express permission. For permissions, please contact EBRI at permissions@ebri.org. Ho of 8 ld5 en, pe Sarah rcent in 2 , and Da 010, i niel S t hadchras generally s. 2020 re. b“D ound efin ee dd Contribution Plan Participants’ Activities, 2019.” ICI Resear p ch Report ha ve lower 401(k) balan Rusces th sell 200an 0³ those who a 16 re older or have longer tenures. See Holden et al. 2018a. 20 participants Pe inrc the en EBRI tage/ICI databas of eligible e 4 0 ov 1er (kall. ) p lan participants with loans outstanding, year-end 2018 of partici assten ets co ure pan uld be identified. (Figure t’s assets 2). Partici in all f un pan ds.ts i Plan n th balan e consces istent are s const ampleructed are both as the olde sr a um of nd lon allge parti r tenu cipan red t b than alance partic s in ip th ants e plan. in the Figure 3 of older participants, or those with longer tenures — both of whom tended to have larger balances at the beginning of 40s 0 44.7% 20.4% 5.0% 6.0% 2.9% 6.6% 10.6% 2.2% 1.5% 74.2% (April). Available at www.ici.org/pdf/20_rpt_recsurveyq4.pdf. during the lon 2006gitudinal 2007 study. Reg 2008 ardi 20ng i 09 ndivi 20du 10 al 2011 2012 2013 2014 2015 2016 2017 7 Annual flows reported on Form 5500 and year-end overall database at year-end 2018. Distribution of 401(k) Account Balances by Size of Account Balance Contribution amounts and contribution rates tend to increase with age and earnings. See Figures A3 and A4 in Brady and Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 This paper provides an update of a longitudinal analysis of 401(k) plan participants drawn from the EBRI/ICI 401(k) the study period tha 2010 n younger w 2011orkers or t 2012 hose wit 2013 h shorter 2014 tenures 2015 — showed 2016 more mo2017 dest perce 2018 nt growth in Report availability: This report is available on the internet at www.ebri.org and at www.ici.org The tenure composition of the consistent sample also was roughly similar to the tenure composition of 401(k) 50sparticipants’ contributio 44.4% n act 15ivity .2%, defined 5 .c 7ontributio % 7 n .0% 3.9% 9.1% 10.7% 2.7% 1.3% 67.3% Investme nt Options Percentage of participants with account assets, billions of dollars, 2000–2019 Bass 2020 or data tables in Internal Revenue Service, Statistics of Income Division 2020. database. account size (Figure 6). For example, the average account balance of 401(k) participants in their sixties increased 122.9 5 Holden, Sarah, and Jack VanDerhei. 2002. “Can 401(k) Acc Figure umulations 1 Generate Significant Income for Future 96 partici pants in the year-end 2010 EBRI/ICI balanc 4 es 01(k in s ) pec data ifi bed ase. ranges For e , xam year pl -end e, 96 16 p 96 2018 96 ercen 96 t of the consistent sample had ( DC) plan particip Me ants dian tend to continue contributing in 9595 60s 38.9% 14.9% 5.9% 25% 8.7% 6.4% 12.4% 9.1% 2.4% 1.2% 57.9% 95 94 9494 94 8 93 Consistent Sample 92 Was Older Than Participants 17 Interest, pe At yea rcentr ( -e a nd 102 .5 018 percent , 57 percen compoun t of nd 92 onan -target nual -average date bala g 92 nced ro 92 wt fu h nd rate) ass be ets were ass tween year umed -end 2 to01 be inv 0 and yea ested in r-end equities ( 2018. see Retirees?” Investment Com91 pany In 91 stitute Perspective 8, no. 3, and EBRI Issue Brief, no. 251 (November). In the EBRI/ICI 401(k) database, in 12 vestment options ar 9191 e grouped into eight broad categories. Equity funds consist of 90 more than 20 years of tenure in 2010, similar to the 15 percent of the participants in the entire EBRI/ICI 401(k 90 ) any given year to their plans. 90 89 All Consistent 42% 89 89 89 8889 23% 88 Because Since 19 the 96, th annu e Em alpl cros oyese B sections enefit R cover in esear the p cEBRI/IC articipants h Institute I 401( w (EB itk) h RI) and Dat a wi ab dease the rang Inv ate Year of est pment Com arti -End cipati 2018 on pan ex y I penst rienc itute e in 40 ( 88 ICI) 1(k have wo ) plans, rked 7 87 Dividends, 87 Investment Company Institute, Quarterly Su86 pplementary Data). The allocation to equities in target-date funds Investment returns, rather EBRI/ICI 40 t 1(han k) Dataa ba nnu se al contributions, generally account for most of the change in accounts with larger Available at www.ici.org/pdf/per08-03.pdf and www.ebri.org/docs/default-source/ebri-issue-brief/1102ib.pdf. pooled invest Ann ments ual pe p rcrim ent aril chay in ngeves in to ted tal i rn e s tutoc rn in ks d, i exncluding equity mutual funds, bank collective trus 85 ts, life insurance Sample database (Figure 2) 41.8% . Twent1 y6-.eight 6% percen 5.t of 6% the consis 7.3% tent sam 5.0 ple % had five or 9.9% fewer year 10.0% s of t2 en .4% ure in 201 1.3% 0, 65.1% Percentage of participants by age, year-end meaningful analysis of the potential for 401(k) participants to accumulate retir Totaement l T as otaslets Ben must e efits xamine Gains, a the nd 40A 1(k sse )t s at together on collecting and analyzing annual data on millions of 401(k) plan participants’ accounts. This report reflects Consistent Sample bal ances. Betwe separate en acco year 79 -unts, end 2010 and oth and er p year oole -en d inves d 2018 tm , the entsU . Si .S.mila rly, bond funds are any pool 1 ed account 2 primarily invest 3 ed in 4 varies with th 78 e funds’ target dates. For target-date funds, investors were assumed to be in a fund whose target date was compare 77d with 39 percent of participants in the entire AgeE ofBRI/ICI Participant 401(k) database. Year-End 2018 Contributions Disbursed Other Items Year-End 76 S&P 500² 76 76 pl data an accounts through year of pa -en rticip d 20 ants 18 and who EBRI mainta ’s an ind edICI ac’s on counts goin og ver all resea of rch the int years be o 401(k)ing st plan u partici died (pan cons tsist ’ aectiv nt p ity. art icipants). For 75 Holden, Sarah, and Jack VanDerhei. 2004. 19% “ContributionF Behavior igure 6 of 401(k) Plan Participants 19% During Bull and Bear 73 74 72 s nea tocrest to t k market heir 65th generally ros birthday e (Figure . Allocation to 10), whi equities ch ten 20 in target ds t s 30o s 40 -date f s 50sunds 60s is assumed to vary with investor age. The equity bonds. Balanced 72 funds are pooled accounts invested in both stocks and bonds. They are classified into two Balanced Funds 71 Figure2000 5 $169 $172 -$79 1,738 p example, because of changing samples of providers, pE la Bns, RI/ICI an 401d (k p ) Da art tabici asepants, changes in account balances for the entire Changes in 401(k) Plan Account Balances Among Consistent 401(k) Participants Markets.” National Tax Association Proceedings, Ninety-Sixth Annual Conference on Taxation, 28% November 13– portion was estimated using the indu Russtry sell 2 0 av 00e ³rage equity percentage for the assigned target-date fund, which was calculated As expected, the consistent participants who were followed over the eight-year period tended to have longer tenures by s provide ubcategor a boo ies: s targe t to 40 t-1(k date ) pfu lan ndacco 5% s and unts non ho -tld arget ing -date balanced funds. A target-date fund typically rebalances its 2001 2 174 , 3 147 -119 1,701 401(k) Plan Account Balan 10% ces Among Consistent 401(k) Participants Consistent Sample 13% database P are erce not a nt chan relia ge ibl n e a vmeas erageure 401o (k N f )o ho n p-la T w n a rin a gc edi tc-o vi udu nt al ba p laarticipants nce among h cav one sG is far IC te sn ed t 4 .a A 0 n1 d(con k) ps aist rtic ent ipan stample s by a i gs e n an ec d ess tenary ure to 15, 2003, Chicago: 44–53. Washington, DC: National Tax Association. using the Morningstar Lifecycle Allocation Indexes (see Morningstar 2019). year-end 2018, compared with the broader base of 401(k) participan 21% ts in the EBRI/ICI 401(k) database. Participants in equities. On average, about two-thirds of the consistent portfolio to become less focused on growth and more focused on income as it approaches and passes the target date 2002 182 $89, 147 699 $90,015 -2 03 1,565 Compound Annual Average 40E 1 q(uk) ity plaT na ra gcco et-Da u Bta e n r ctl ab D ya sa tC e la aB pn a itce a la l n Uc .f S eo .d r A g co gre B n go asi n tedst Bo e nn d t M 4o0 n1 ey (k) p Oa thr etri ci Stp ab a len -ts Cb om y pa an gye and tenure, year-end Memo: accurat Table ely of C gauontents ge changes , such as growth in account balances, experienced by individual 401(k) plan participants over 14% 26% 9 1, 2 2 4 the consistent sample, by definitIion, had ndex4 at least eight years of tenure in 2018 (the length of time for the longitudinal Agof s eample the fund, T o ef 401 nur which e (k) particip is usuall ants y included ’ account i b n th alances w e fund’sere nam e. Non-target-date balanced funds inclu 19% de asset allocat Avion erag or e G row th For a description of the investment options, see page 16. 2003 Funds Funds Funds Funds Funds Value186 Funds Stock 141 Other 300 Unknow n 1 E,q 9u 3it2 ies Age Group 26% Holden, Sarah, Jack VanDerhei, Luis Alonso, and Steven Bass. 2011. “401(k) Plan $7 A 4,41 s6s et Allocation, Account Balances, time. Table of Contents ................................................................................................................................ 25% .................. 2 Gro up (years) 2010–2011 2011–2012 2012–2013 18 2013–2014 2014–2015 2015–2016 2016–2017 2017–2018 2010–2018 Rate, 2010–2018 analys is), with none having five or fewer years of tenure, 10 percent having more than five to 10 years, 54 percent invested in equities (Figure 7). Subdued stock market hybrid funds, in addition to lifestyle funds. Company stock is equity i 2004 n the 401 204 (k) plan’s167 sponsor (the 204 employer). 2,193 38.8 10 Tenure 20s 19.9% 55.6% 3.0% 2.8% 1.4% 2.2% 6.2% 7.1% 1.8% 77.9% See Hoand lden and Schra Loan Activity ss i 2020 n 20 . 10.” ICI Research Perspective 17, no. 1 $63, 0, 742 and EBRI Issue Brief, no. 366 (December). 20 s All 77.6% 63.0% 62.5% 44.0% 20.6% 27.2% 34.9% 4.7% 1,367.2% 39.9% 12% 19 $59,297 Fi having gures more ................................ than 10 to 20 years ................................ , and 36 percent havin ................................ g more than 20 years ................................ (Figure 2). In contras ................................ t, preliminary . 2 Money f peA rform ge Gro a und nce ups in 2 cons (ye01 aist rs1 ) of was those 2010 followe funds d by str de 2011 signe ong d er to ma g 2012 rowth intain a stable 20132005 share 2014 pric 223 e. Sta 2015 ble-value prod 189 2016 ucts2017 , such as GICs 146 2018 2,3 93 37% A few k >5ey i to 10 nsigh 10t 5s .3% emerge fr 73.4%om lo 6o 9.king 3% at the 49.6% 1.9 mi 22ll .7io %n cons 30.istent 4% part 36.1% icipants 6.6 in % the EB 1,993R .6I/ % ICI 40 461( .3% k) 32.4 10% 30s 35.6% 37.8% 3.0% 4.1% 1.2% 3.1% 7.8% 5.7% 1.8% 78.7% Available at www.i 9% ci.org/pdf/per17-10.pdf and www.ebri.org/docs/default-source9% /ebri-issue-brief/ebri_ib_12- 11 31.5 $48,128 For statistics indicating the hi 20 gher propensity of withdrawals among participants in their sixties, see Holden and VanDerhei analysis of the entire EBRI/ICI 401(k) database in 2018 finds 45 percent of participants had five or fewer years of 30 in s 2012 thro All ugh 2014 25.1%(with 8% 3partic 7. 7% 9% ularly 7% 7% 38s .5t% rong 28.8% 11.8% 2006 22.5% 251 27.4% 228 2.5% 450.303 8% 232 .8,% 773 and 2 0 ot sher stable-A valu ll e fun $ds, 2,424 are r$ ep 4,3 ort 05ed as$ one 7,015 categ$o 1ry. 1,3 T 97he other $16,4 1category 6 $19, 7 is th 92 e res $25 idu ,17al 9 for $other i 33,962 nves $3 tm 5,5ents 65 , 35% 6% data Introductio base n o v ................................ er the eight-year peri ................................ od from year-end ................................ 2010 to year-end ................................ 2018. .......................... 4 2011_no366_401(k)-update.pdf5% . 28% 5% 5% 24% 40s 43.6% 25.8% 3.8% 5.4% 1.6% 4.6% 7.9% 5.4% 1.9% 74.0% 25.5 2002. In addition, nonhardship withdrawals, $3 7, whic 265 h are generally limited to employees who are aged 59½ or older, constitute >5 to 10 69.2% 65.1% 56.4% 36.1% 17.4% 4% 28. 4% 6% 33.9% 4.1% 1,151.7% 37.1% 21 4% tenure, 19 percent had more than five to 10 years, 23 percent h 2007 ad more than 273 3% 10 to 20 years, 3% 261 and 13 p 215 ercent had mo 2,97re 5 s app uch reciation as real e in 2 s> tat 5 01 te o 1 3), funds 0 mo . d 1 Terated ,he final 793 in cate 2015 3,68g 1ory , and resume , unknow 6,383 n 3% d , consis 10,80 3% 9ts of fu 16nd ,16s 9 that coul 19,84d 4 not be 25 ,identif 873 ied 3. 5,2 25 37,539 2% 2% 2% $29,270 21.8 21.3 >10 to 20 21.7% 34.5% 35.1% 29.0% 10.7% 21.8% 25.7% 2.3% 394.3% 22.1% 50s a ma jority of all wi 42thdra .4% wals (se 21.7e %Alling, Clark 4.5% , and Stinnett 202 7.1% 0).2 .6% 7.4% 7.6% 4.8% 2.0% 65.3% Sample of Consistent 401(k) Participants, 2010–2018 .............................................................................................. 5 $25,077 than 20 years. 2008 285 233 -770 2,203 growth • in The avera 2016 and 20 ge 417 01, (k) before plan f acc alling at ount the balanc ene d fo or cons f istent participants rose each year from 2010 through year- 30s All 15,754 19,716 27,184 37,648 48,484 54,194 66,404 84,628 86,776 $18,433 40 Ho s lden, Sarah All , Jack Va $17,1 686 1.7% nDer2 hei, 6.6%Luis Alons 33.2% o, and Steve 20.4% n $18, Bas 127 7. s 3. 2 % 018a. 17“.40 0%1(k $16) ,8 P 362 la 3.n 3% Asset All 0.4 ocat % ion,2 Account 52.7% Bala 1nces, 7.1% 16.3 $16,732 16.0$16,649 $17,630 <$10,000 $10,000 to >$20,000 to >$30,000 to >$40,000 to >$50,0Figure 00 to >$60,2 000 to >$70,000 to >$80,000 to >$90,000 to >$100,000 to >$200,000 14.6 60s 12 36.4% 21.2% 4.7% 8.9% 3.2% 12.3% 6.3% 4.7% 2.3% 54.8% 13.7 Data from the ICI Survey of Defined Contribution Plan Recordke 2009 epers find tha 256 t DC plan partic 206 ipants genera 431 lly 2,718 Age and Te >5 to 1 nu 0 re of 46 Consis .3% te $2nt 401(k 5 0,0 00 .4 0 % $30,0) 0 P 0 4arti 7.8 $4 % 0cipan ,000 ts $5 3 0 0 ,................................ 0.06 0% $60,00014.6 $% 70,000 28% $2 84 0,. 04 0................................ 0 % $90,000 30.2$% 100,000 $2 2 0.09 ,0% 00................................ 710.9% 29.9.... % 5 20 18 (Fig end 201 ure 10). 7 Thoug before edgi h contributio ng downs a n in 2018 nd loan . Overall, the average account balance increased at a compound annual >5 to 10 6,549 11,084 18,296 28,606 123 .0 8,925 45,717 58,770 78,710 81,972 and Loan Activity in 2016.” ICI Research Perspective 24, no. 6, and EBRI Issue 24% Brief, no. 458 (September). Consistent Sample Had Longer Tenure Than Participants 24% All Consistent 25% >10 to 20 13.5% 27.9% 33.7% 22.1% 7.9% 18.2% 23.7% 0.6% 276.0% 8.7 18.0% Size of 401(k) Plan Account Balance 7.8 2010 265 243 337 3,119 repayments average also g plro ay a wth role rate in the of 13 g .9 ro pe wth rce of nt f the rom 2010 to 2018, rising from $63,756 to $180,251 at year-end 2018. >10 to 20 18,342 in 22th ,32 e 3EBRI/ICI 30,01401(k) 9 4Datab 0,556 ase 5 at 2,3 Year 12 -End 57,2018 919 70,522 88,619 90,658 stayed the Av co ailab urse th le at rough th www.ici.or e finan g/pd cial cri f/per sis and 24-06.p en df suing and 6.0 yea wwrs. During e w.ebri.org/ach pdf/yea briefs r from pdf/EBRI 2010 _IB through 2 _458_K 01 -9, fewer Consistent Participants Have Accumulated Sizable 401(k) Plan Account Balances ....................................................... 6 Sample >20 to 30 7.0% 22.2% 30.1% 4 1.8 9.4% 5.0% 14.1% 20.1% (*) 189.9% 14.2% 40.6% 23. 45 .2 % 4.3% 7.0% 2.4% 7.8% 7.3% 4.9% 2.1% 65.4% 3.5 2010 2011 2012 2013 2014 2015 2016 2017 2018 2011 2.6 283 250 -1 3,112 2.1 Percentage of participants by years of tenure, year-end average • 401(k The med ) plan ian 4 account 01(k) p bal lana acc nces o ount balanc bserved,e the for cons 1.4istent participants increased at a compound annual average 40s All 43,749 48,884 61,896 82,450 99,295 106,521 124,651 153,634 154,284 50 s up Alldate.10Se 7.6% pt18.pdf 20. .8 % 28.2% 18.4% 5.3% 0.5 13.8% 20.5% -0.1% 184.9% 14.0% 1 14% (*) 14% A target -date fund typically rebalanc p es its portfolio to become less focus12% ed on growth and more focused on income as it approaches and passes the target date of the fund, than 3 percent of DC plan participants stopped contributing to their 401(k) plan accounts. Some of these participants may Changes in Consistent 401(k Data are prelimina)ry P . 10% articipants’ Account Balances ................................ <.05% .................................................... 7 20s 30s 40sYears of Tenure 2012 50s 303 60s 282All 357 3,495 >5 to 10 33.1% 41.2% 41.7% 27.4% 12.7% 21.6% 27.3% 3.4% 511.8% 25.4% pattern of growth account balanc rate of 17e growth .3 percent rates over the from perio year d, to to $90,015 at year-end 2018. which is usually included in the Not fund’ e: Ac s cnam ount e. balances are participant account balances held in 401(k) plans at the participants' current employers and are net of plan loans. >5 to 10 13,936 20,387 30,661 45,322 59,184 67,806 84,365 109,875 113,007 Note: Account balances are participant account balances held in 401(k) plans at the participants' current employ ers and are net of plan loans. have stopped contributing because they reached the contributio Age of Parn limi ticipantt. See Holden and Schrass 2020 for DC plan participants’ Retirement savings held in plans at previous employers or rolled over into IRAs are not included. p 0 to 2 >2 to 5 >5 to 10 >10 to 20 >20 to 30 >30 >10 to 20 12.3% Consis 2 ten 5.4 t S % ample in 20 31 00.9% EBRI/ICI 401 22 (k .1 ) Data % base in7.Co 6% nsistent Samp 16l. e 7i% n 2018 EB2 RI 2/ICI 4 .3%01(k) Data 1 ba .1s% e in 249.5% 16.9% Data are preliminary. -2.0 2013 325 326 645 4,148 Retirement sav ings held in plans at prev ious employ ers or rolled ov er into IRAs are not included. 2 p Backgroun Holden, Sarah d F $acto 1 , Jack Va 0M rs So oru In L rce e: sfluen TnDer s abulatiocing 401( hei, ns fromLuis EBRI/I Alons CI k) Pa P >rti $l c 1an ip0 o, and Steve aM nt-As Dir toe s $ cets t1 ed 0 Ret 0 M ................................ iremen Bas nt Plan Dat s. 2 a Col 018 leM ctio ob nr e Pro . “W T je h ca t................................. hat Does n $100M Consistent Partic ................................ All P ipation in lans 401(k) 11 year also • The gro reflectswth in the sto account ck mark bet al an perfor ces fmance. or consis tent participants generally exceeded the growth rate for all Not all participants are o> ff1 ered 0 to t2 his 0 inves3 tm 9,ent 683 option. 45,040 57,598 77,008 94,034 101,425 119,888 148,279 149,189 -4.2 2010 -4.4 2018 -4.4 annual activiti Sourc es between eSourc : Tabe: ul a Ttabulat ions 200 ions from f 8 an rom EB R EBR I/d ICI201 I/ IC PIa Part r9 tic. F iic pipant aor nt- D -an D irirec ec anal tte ed d R R et ysis of eirem tirem ent en co Plan t Pntributio lD an at D a C atollec a Cton a ion llec Projec cti tionvity du P t.roject.ring the bear market of 2000–2002 using >20 to 30 5.7% 19.4% 26.9% 18.1% 4.2% 12.9% 19.7% -0.5% 165.1% 13.0% 3 2014 349 366 278 4,406 4% 4% p 5% GICs are guarantPlans Gen eed Notinv e: E es litgm ibent le erat Dat 4 c 0o 1 a (e? Ch nt ak re )rac pp re lta ls im n. a in p ang a ry r.tices ipa i nn ts 4 ar0 e 1(k thos)e P inlan 401 A (k)cco planunt s thaB t oalanc ffer loaes, ns. 2010–2016.” ICI Research Perspective 24, no. 7, participants in the EBRI/ICI 401(k) database. >30 >20 t5 o. 0 3% 0 68,1 36 6 .6 1% 732 ,1 54 .5 2% 89 1,7 3.9 08 %Plan A 11 s6 s 3e ,.3 3 ts 2 % 2 13 17 0,.7 91 % 0 14 14 7,.5 49 % 8 16 -0 5.,7 0% 24 1 19 48 0,.2 1% 19 1981 ,1 16 .6 8% the cross -sectional EBRI/ICI 401(k) databases, see Holden and VanDerhei 11% 2004. The analysis finds that, overall, 401(k) References .......................................................................................................................................................... 16 Note: The consistent sample is 1.9 million 401(k) plan participants with account balances at the end of each year from 2010 through 2018. Participant age -11.0 4 2015 378 3869% -1 4,377 Withdrawals and borrowing 12% reduce 401(k) plan 10% account Equities include equity funds, co ism ag pany e as o s f t th oec yk e, a t r-he endequit indicay te po d. rtion of target-date funds, and the equity portion of non-target-date balanced funds. 60 s All 6.6% 17.4% 22.9% 16.7% 2. 7% 9.7% 14.2% -3.4% 122.9% 10.5% Reflectinand g th ei EB r RI high Iser su avera e Brief ge , n a o. ge464 and te (Nov nure, ember). the Available at consistent g ro wup ww.i hici.or storically g/pdf/p also er24 have -07.p ha df d av and er age and median partici 50spants’ contributi All on rates 78,6 7 were li 0 ttl 84 e cha ,676 nged 10 in 2000, 2,323 2001, an 131,177 d 200 1552 when ,374 co 16mpa 3,612red to 18 1999 6,174. On a 22vera 4,287ge, 40 22 14 (k) ,14 3 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Source: ICI tabulations of U.S. Department of Labor Form 5500 Research File. >5 to 10 26.8% 34.8% 34.5% 24.8% 10.8% 2016 16.5% 399 21.5% 391 1.4% 355.335 8% 204 .9,% 741 Endnotes ............................................................................................................................................................ 18 Yo balung ances in er 401 the (k) part EBRI/ICI icipa 401(k nts ) d oatabas r those e, w wi hi th s le loan ma ller year-end 2010 balances experienced higher percent Note: Funds include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested in the security indicated. Age account bal wwan w.eb cesr that i.org/ar docs e m /defau uch hig lt-h ser th ource/ an eb the ri- avera issue-brief/ ge and eb ri m_i ed b_ ia4n 58_k acco -u unt balanc pdate-10sept es of 18 t.p he broa df. der EBRI/ICI 401(k) pa Change rticipants’s co in C ntributio onsi n behavio stent 401 r does not appear to ha (k) Participve ants’ been materiall Account Balance y affected by the bea s r market in equities from 2000 2011 2012 2013 2014 2015 2016 2017 2018 2019 >5 to 10 21,028 27,981 39,505 55,994 71,364 80,421 97,803 124,481 128,656 >10 to 20 12.9% 22.9% 26.7% 21.7% 6.1% 1 25% 3.2% 17.2% -1.3% 197.2% 14.6% 23% group is based on the participant's age at year-end 2018. Percentages are dollar-weighted averages 2017. 429 425 763 5,486 23% gro repayment wth in h ac ascount a positiv bae la inc mpact. With es compare drawal d wit act h older ivity participants or those with larger year-end 2010 through 2002, whether measured in dollar amounts or percentage of salary they contributed. database (Figure 4). >20 to 30 5.7% 16.9% 22.2% 16.9% 2.3% 9.3% 13.9% -3.5% 116.8% 10.2% In any given year, the change in a participant’s account balance is a combination of three factors: Although annu>al 10u to pd 20 ates of 46 t ,7he 89 EBRI/ICI 52,529 401(k6)5 d ,8ata 89 base8 6 provi ,276 de valu 105,abl 316e pe1 rs 1pe 3,3cti 60ves of 132 40 ,271(k 1 ) pl 16 an 1,7 account 24 16 3,545 31% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 2018 N/A N/A N/A 5,330 Internal Revenue Service, Statistics of Income Division. 2020. SOI Tax Stats: Individual Information Return Form W-2 ba amo lang nces act >3 .ive 0Three primary DC p 4.lan 0% partic fa1cto i4 pan .2% rsts af is fect relativ 20 .ac 4%count ely rare. 1 bal 5.9anc % es: contribu 0.5% tion 7.s 5, i %nvestm 11ent .4% returns -4., an 4% d withd 90.7ra %wal and 8loan .4% 13 balances, asset all >20 to ocat 30 ion, 1 a 05nd ,99 l 0oan 1 act 12,ivit 033y acros 133s ,7 w 71ide cro 169s,s 7 sections 82 200 of ,58 2particip 209ants ,056 , cros 23s 5- ,9 s2 ection 9 2 al 82analys ,308 es 28 ar 1,e 0 2not 5 See Holden and Schrass 2020. 2019 N/A N/A N/A 6,395 All All 8.4% 21.2% 27.6% 18.8% 5.2% 13.7% 19.6% -0.7% 182.7% 13.9% 401(k) plan Statac istcount ics. Avbal ailab anc lee at s ten ww dw.i ed to i rs.gov/st ncreas atis e with tics/soi bo-th tax ag -se tat as nd te -individ nure am ual-inf ong orm tation he cons -retist urent n-form group of -w2-s p taarti tistics cipan . ts, activ Typical ity. ly, f Thew e per tha ercent n change 5 percent in av of active erage 40 DC 1(k plan ) pl an account balance of participants in their twenties was heavily 19% • New contributions by the participant (+), the employ er (+), or both; 1 well suited to examini >30 ng the 146 i ,0mpact 14 of 153 ,con 374sistent 178,p 86 artic 4 ipa 22 tion 4T ,4o 9 t1 al inc 401(k ont2 ribut 62,io ) 6 p 4 ns 3lans. Cros include 27bo 1,2 th 2s 3 em splo ections y3 er 00 and ,92 change em 1 ployee 353 cin , o1nt 3com 4 ributio posit ns 35 . 0,ion 586 (*) = between -0.05 and 0.05 percent 22% 14 For the complete update from the year-end 2016 EBRI/ICI 401(k) database, see Holden et al. 2018a. Data since year-end Figures as they do in the cross-sectional EBRI/ICI 401(k) database. Younger participants or those with shorter job tenures at inf partici luence pan d by ts tathe ke any relative with siz drawal in e of theair give cont n ribu year, tions with to their 2account balances and increased at a compound average • Total investment return on account balances (±), which depends on the performance of financial markets and Total benefits disbursed include both benefits paid directly from trust funds and Note: Age and tenure groups are based on participant age and tenure at year-end 2018. The all category includes participants with missing tenure information. Account balances are participant from year to year because the selection of data providers and sample of plans using a given provider vary, and because 60s All 94,123 100,318 117,760 144, 723 168,820 173,387 190,136 217,211 209,814 (*) = between -0.05 and 0.05 percent 2016 Invesco tmntinue ent Co to mpany I be processe nstitut d, e. Quart and some pr erly Leli ong minary -Term resu Mut lts hav ual Fun e bee d As n in secl t Compos uded in this p ition.aper. Washin gton, DC: Investment 25% 13 acctheir ount bala current nces held em in 401pl (k) oy plan ers s at te the nded participan to ts ' chave urrent smaller ac employers and arcount e net of plbal an loanc ans. es, Retire w mh enil t e savthos ings he e who ld in plan were ol s at previous de emrpl or h oyers ad or rolo lled ng over er in job to IR Atenures s are not fewer growth tha rate n 2 of pe 39 rce .9nt takin percent g pe hardsh r year ip with betwdrawal een year s. -end 201 prem 0 and year ium payment -en s m d ade 20by 18 plans . to insurance carriers. Amounts exclude benefits Figure 1, Consistent Sample Was Older Than Participants in the EBRI/ICI 401(k) Database at Year-End 2018 .............. 5 on the 1 allocation of assets in an 1 individual’s account; and 54% All indexes are set to 100 in December 2010. 40 1(k) participants >5 to join 10 or 2le 5,2 ave p 19 lans. 31,9 7 In 6 additio 43,1 n, 15the analys 57,970is covers 72,3 3acco 0 unt balan 80,119 ces h 93el ,3d in 46 401( 113k) ,4 p 08lans at 114 ,948 included. 25% Company Institute. 6 paid directly by insurance carriers. 15 2 tended to have higher account balances. For example, within the consistent group, among 401(k) participants with Prelimin The EBR ary I/ICI 401(k) data from data the E bas BRI/ICI e enviro 40 nmen 1(k) d t is certi atabasfied to b e e fully compliant with the ISO-27002 Information Security Audit • WT ithd he Srawa &P 50ls ( 0 ind-e)x, m borrowi easures tng ( he pe- rf) o, and loan rmance of 500 re sto payments cks chosen (+) for ma.r ket size, liquidity, and industry group representation. Sour ce: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Dat 24% a Collection Project. participants’ current employers. Retirement savings held in plans at previous employers or rolled over into individual >10 to 20 43,556 49,179 60,447 763,600 93,230 98,896 111,950 131,159 129,458 3 This category includes interest, dividends, rent, net gains or losses on sale of assets, 401(k) par Thti e R cipants ussell 200 ten 0 inded x to mea c suo rence s the ntr perfoat rme their ance of the acc 2,00o 0 unts smallesin t U equ .S. com it py s anieecuri s (based ti o es n t. o ta T l he ma ass rket cet allo apitalizacation of tion) include the d 1.9 Figure 2, Consistent Sample Had Longer Tenure Than Participants in the EBRI/ICI 401(k) Database at mo stan re than dard. More 10 to 20 years over, EBRI ha of t s obtai enure ned ata legal opi year-end 201 nion th 8, ol at the der p methodo articipants logy u ten sed mee ded to ts hav the priva e higher cy sta balan nda ces rds of the than youn Gramm ger - indicate that 19 percent of 401(k) plan participants in 2 4 20% unrealized appreciation or depreciation of assets, and other income and expenses. Inves retireme tment nt acc FoCo rme ounts mpany I rly the (IRAs Lehm nst anitut )B are rote. hernot 2 s 02 U. i S0 .ncl .A “Th gud greg e e U ad te in B S R o th ndetir e Indana eement x, tly hes B is. aMark rc laTo ys explor et, CapiS taeco l Ue .S the nd . A gQ g f ruarter eul gal te im Bo pac 2 nd0 I20 t of nde” x ( io sSe ng coptemb m oin pos g e dp er o articipatio f ) s. Available ecurities n inat >20 to 30 102,568 108,443 126,774 154,915 181,070 185,162 202,388 230,435 222,348 million 401(k) plan participants in the consistent group was broadly similar to the asset allocation seen in the annual Leach-BlilYear ey Act. At no t -End 2018 ime has ................................ any nonpublic personal informatio ................................ n that is personally identifiabl ................................................................ e, such as a Social Secu .......... rity 6 The change in any individual participant’s 401(k) plan account balance is influenced by the magnitudes of these three participants: Those in their thirties with more than 10 to 20 years of tenure had an average account balance of plans offering loans had loans outstanding at year-end The bulk of this category is net investment gains or losses. covering government and corporate bonds, mortgage-backed securities, and asset-backed securities (rebalanced monthly by market 20% 401(k) plans, www.ici.org and to u /resear ndersch/stat tand how s/retireme 401(k) nt pl. an participants have fared over an extended period, it is important to >30 190,519 198,090 215% 26,251 272,421 315,865 317,487 341,272 380,118 363,394 4 number, been transferred to or shared with EBRI. EBRI/ICI 401( capitak) liza d tioatabas n). The in ed eu xpd 's to ates tal re. tuOn rn coav nsierage sts of pr at ice a ypear prec-ia end 201 tion/deprec 8ia , ab tion o p 10% lut two us incom-ethir as a ds peof rcencons tage oist f thent e or ig 40 ina1(k l inve )s p tm aerticip nt. ants’ factors relative to the starting account balance. For example, a contri Estimates thro bu ugh tion 201 of 7 are a giv based en dollar on the Depart am mo ent unt produc of Labor Form es 5500 a larg Reser earch $90,658, compared with an 8% average of $129,458 for participants in their sixties with more than 10 to 20 years of tenure 2018, with the youngest (8 percent of participants in analyze a consistent group of participants (a longitudinal sample) who have been part of the database for an extended All All 63,756 69,118 83,755 106 F,8 ile. 30 126,908 133,456 151,694 181,4 p92 180,251 Fi gure 3, Distribution of 401(k) Account Balances by Size of Account Balance ............................................................ 7 Sources: Bloomberg, Barclays Global Investments, Frank Russell Company, and Standard & Poor's. assets were invested in equities — through equity funds, the equity portion of target-date funds, the equity portion of 16 Consistent Sample in 2010 EBRI/ICI 401(k) Database in 2010 Consistent Sample in 2018 EBRI/ICI 401(k) Database in 2018 growth rate when added to a smaller account than it would if added to a larger one. On the other hand, investment (Figure 5). Among consistent participants in their sixties at year-end 2018, those with more than five to 10 years of their Acco twen unt balan ties) an ces are d olde net of st (14 up npa ercent id loan ba of participants lances. Thu in s, unpaid loan balances are not included in any of the eight asset Morningstar. 2019. Morningstar Lifecycle Allocation Indexes (June). Chicago: Morningstar, Inc. Available at Note: Data exclude plans covering only one participant. period — in this case, 2010 through 2018. Note: Age and tenure groups are based on participant age and tenure at year-end 2018. The all category includes participants with missing tenure information. Account non-target-date ba p lanced funds, or company stock. Younger 401(k) participants tend to have higher concentrations in returns of a given percentage produce larger dollar increases (or decreases) when compounded on a larger asset base. tenure categori h es des ad a lo cEB ribed. wer RDat I Issu av a are erag e pBrief relimie na is ry 40 . reg 1(k istered ) plan b in thealance U.S. Paten ($ t and 114, T94 rad8 em ) t ark han Office. ISS those with N: 08 more 87 –137 t X/9 han 0 0 830 87 – y 13 ears 7X/9 0of $ .50 ten +.50 ure ($363,394). their sixties) less likely to have loans outstanding than N/A = not available balances https: are partic//ind ipant ac exe count s.mo balanc rning es held star. in 401com (k) plans /resourc at the partes icipant /PDF/ s' current uploa emd/Mo ployers rning and are s net tar of% plan 20 loLif ansetime . Retirem %20Allocat ent savings held ion in plans %20Summ at previous ary_ Figure 4, Consistent 401(k Note: The consis) te nParticipa t sample is 1.9 nts millio A n 40ccumulate 1(k) plan participan Sig ts withnif accicant ount bala Accou nces at the ent Bal nd of eacha ynces ear from ................................ 2010 through 2018. Participant ...................... 8 equities than older ten 4 ure0 is1(k tenure ) part as of theicip year-ants end ind. ic ated. employers or © rolled 20o20, Empl ver into IRAsoyee are notBe included. nefi t Research Institute –Education and Research Fund. All rights reserved. Sources: Investment Company Institute and Department of Labor. those in their thirties, forties, or fifties (Figure 11). In 062419% So 20FI urce: TN abuAL latio.pd ns frof m. EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Iss s s s s s s s s s s s s s s s s sue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue Bri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri riA res ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef • • • • • • • • • • • • • • • • • • O O O O O O O O O O O O O O O O O Oearch rep c c c c c c c c c c c c c c c c c ctober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, tober 1, 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 or020 020 020 020 020 020 020 020 020 020 020 020 020 020 020 020 020 020 t from the E • • • • • • • • • • • • • • • • • • No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. No. 514 514 514 514 514 514 514 514 514 514 514 514 514 514 514 514 514 514 BRI Education and R esearch Fund © 2020 Employee Benefit Research Institute 13 16 10 14 11 19 17 18 15 12 4 9 7 8 2 3 5 6