Key Findings:
This paper provides an update of a longitudinal analysis of 401(k) plan participants drawn from the EBRI/ICI 401(k) database.
Because the annual cross sections cover participants with a wide range of participation experience in 401(k) plans, meaningful analysis of the potential for 401(k) participants to accumulate retirement assets must examine the 401(k) plan accounts of participants who maintained accounts over all of the years being studied (consistent participants). For example, because of changing samples of providers, plans, and participants, changes in account balances for the entire database are not a reliable measure of how individual participants have fared. A consistent sample is necessary to accurately gauge changes, such as growth in account balances, experienced by individual 401(k) plan participants over time.
A few key insights emerge from looking at the 3.7 million consistent participants in the EBRI/ICI 401(k) database over the four-year period from year-end 2016 to year-end 2020.
- The average 401(k) plan account balance for consistent participants rose each year from year-end 2016 through year-end 2020. Overall, the average account balance increased at a compound annual average growth rate of 19.4 percent from 2016 to 2020, rising from $78,008 to $158,361 at year-end 2020.
- The median 401(k) plan account balance for consistent participants increased at a compound annual average growth rate of 28.3 percent over the period, to $62,134 at year-end 2020.
Younger 401(k) participants or those with smaller year-end 2016 balances experienced higher percentage growth in account balances compared with older participants or those with larger year-end 2016 balances. Three primary factors affect account balances: contributions, investment returns, and withdrawal and loan activity. The percentage 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 57.4 percent per year between year-end 2016 and year-end 2020.
401(k) participants tend to concentrate their accounts in equity securities. The asset allocation of the 3.7 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 2020, more than two-thirds of consistent 401(k) participants’ assets were invested in equities—through equity funds, the equity portion of target date funds, the equity portion of non–target date balanced funds, or company stock. Younger 401(k) participants tend to have higher concentrations in equities than older 401(k) participants.
Figure 5
Figure A5
Younger Participants Tend to Have Larger Shares Allocated to Equities
401(k) Plan Contributions, Investment Returns, Benefits Disbursed, and Assets
1 2
Figure 4
Percentage of 401(k) plan account balances allocated to equities by age, 2020
Fi gure A5, 401(k) Plan Contributions , Investment Returns, Benefits Disbursed, and Assets ....................................... 15
W C b A US R rhanges ppendi it oa ehdr D fe d ee p r a ra e w E rtnc a B m ls Rx e Ie a in nt /I nd s C of IC b40 o or Lans 1( rb ow or k) is , ing d E tam e trant p eb loy dauc se, 4 eee 0 40 11 B 1 e1( .4 ( ne k) kp fit )e p s Se rP c la e ar n a nt ct ur c ha icipant citoun d y a Ac t d cm b ount a ini la sst nc ’s w rA e as in t tcc it ion. h o m he un 20 or 2 e Et 2 B t . ha B RI Palanc r n /I iv C $2 aIt e 00 40 P,0 1( e en 00 s ksi ) , on daand tP ala b9 a n B .0 se, ull p e w e rhil c tin, ee nt loa A ha bst n d r a bc ett w ofe en
Sarah Holden is Senior An nD ua ir l e flc ow tor s r e of poRe rtedt ir oe n m Foe rnt m 5a 5nd 00 aInnv d yeest aror -en Re d asea ssetr sc , h a billiotn t she of dIo nv llae rsst , 2 m 00 e0nt –2 0 C2om 1 pany Institute (ICI).
What Does Consistent Participation in 401(k) Plans
Changes in 401(k) Plan Account Balances Among Consistent 401(k) Participants
materially affected by the bear market in equities from 2000 through 2002, whether measured in dollar amounts or
$1 rep 00 ay,00 me0 a 2020 nt nd ha s a For $2 00 m posit ,000 55iv 00 A .e im nnu pac atl Re . Wit phdr ortsa w (Ve al a rsicon tiv it 1.0) y a. mW ong ash a ingt ctivon, e DC D C p: laUS n pD ar etp icaipa rtm nt es is nt of reL la atb iv or e, lyE rm arpeloy . Ty ee p ic Ba ell ne y, fits
Steven Bass is an economist at ICI. Craig Copeland is the Director of Wealth Benefits Research at the Employee
B In a radny y, g Pe ivte en ye r, and ar, St the ev e cn haBng ase s. 202 in a p 1. “ artW icipa ho nt Pa ’s a rticcipa count tes in Re balanc tiree m is e ant c om Plab ns ina , 20 tion o 18.”f th ICrIe Re e fsea actor rch P s: erspective 27, no. 8
Figure A1
Percent change in average 401(k) plan account balance among consistent 401(k) participants by age and tenure
Ge Figuren Ae 6, r Most at e 40? 1( C k) Ph laa n Pn arg tice ipas nt i s A n re 40 in Pla 1 ns (k) Wit Pl h Ema ploy ne Accou r Contributionn s t ................................ Balances, .................. 2016 – 15
Interest, Dividends, Gains, and
percentage of salary they contributed.
fewer tha Se n 5 cur pit eyr cA ed nt m of inis atc rtaiv tion (Se e DC pp latn e m pa bretric ). ipa Av nt aila s tb ale ke a a t ny withdrawal in a given year, with fewer than 2 percent
Bene(fit Se p Re tesea mbrecrh I ). A ns vtait ila utb ele ( E aB t RI ww ).w Tha .ici.or nks t g/fo ile As/ da 20 m21 B/pe ensrim 27 hon, -08.p Ed BfRI . data compliance and IT director, for data
Consistent Sample Was Older Than Participants in the EBRI/ICI 401(k) Database at Year-End 2020
1 2 3 4
Total Contributions Total Benefits Disbursed Other Items Assets at Year-End
Re 20 flect 2ing 0 their higher averag 14e age and tenure, the consistent group also had average and median account balances
• New contributions by the participant (+), the employer (+), or both.
Figure A7, Domestic Stock and Bond Market Total Return Indexes .......................................................................... 16
taking haw rd wsw hip .dol.g withdr ov/s ait weas/ lsd . olg Dov ata /f il fr eom s/E B tP he SA er c /r E eB e ntsea RI ag/ eI ro C cfhe I p 40 ar rs/ ti1( cst ipk a a )nt tis d s a t bic t ya s/ a bga ree se , ty ir eindic e am r-ee nnt a dt-eb tull ha ett ins 16/pr peiv rcaetnt e- p of ens 40 ion 1(k -p ) la pn la-n bulletins-
14 tabulations. This Issue Brief was written with assistance from the Institute’s research and editorial staffs. Any views
See Hold 2000 en, Schrass, and $169 Chism 2023. $172 -$79 $1,738
March 23, 2023 • No. 582
Compound Annual
F Fiig gu urre e 2 3
that were much higher than the average and median account balances of the broader EBRI/ICI 401(k) database (Figure
Bright • Scop Tot ea a l inv nd Ienv stm est em nte rnt et ur Com n op n a any cc Ioun nstitt ut ba ela . nc 20e 2s (± 2. Th ),e w Bhic righ d htSc ep op ends e/ICon I Dte he fin p ee dr C for ont mraibut nceion P of fin laan P ncia rofile l ma:r k Ae C ts a lose nd
participant abs in p stractla -20 ns20 offe .pd ring f. loans had loans outstanding at year-end 2020, with the youngest (6 percent of
2001 174 147 -119 1,701
expressed in this report are those of the author and should not be ascribed to the officers, trustees, or other
By Sarah Holden, ICI; Steven Bass, ICI; and Craig Copeland, EBRI
Age of Participan8 t6.4%
Figure A7 Average Growth Rate,
15 Cons 8iA 4 s.c t0 e c % n o tu 4n 0t1 B (ka ) lP aa nrc te ics ip T an en tsd A tc oc u In m cu re laa ts e e S W ign itih fic A ag nt e A ac n cd o u Tn etn B ua rle ances
2) . Se Ae t y He oa ld re -e n, nd Ba 2020 ss, a, nd the Cop av ee la rnd ag e2022. 401( k) plan account balance of the consistent group was $158,361, more than 80
2002 182 147 -203 1,565
L on ook a the ta 40 lloc 1( ak tion o ) Plans f a, ss 2019 ets in . Sa an n D indiv iegidua o, CA l’s a : Bc right count Sc.op e, and Washington, DC: Investment Company Institute.
participants in their twenties) and oldest (13 77p .4 e% rcent of participants in their sixties) less likely to have loans outstanding
sponsors of EBRI, Employee Benefit Research Institute-Education and Research Fund (EBRI-ERF), or their staffs.
Age Gro up Tenure (years) 2016–2017 2017–2018 2018–2019 2019–2020 2016–2020 2016–2020
Domestic Stock and Bond Market Total Return Indexes
Average 401(k) plan account balance for consistent 401(k) participants by selected age and tenure, year-end
E 2003 BRI/ICI 401(k) Datab 186 ase 141 300 1,932
60s
9%
p Ye ar hoo centFi highe nance r . tSunn han ty he va a lev, eC ra Ag : eY a ac hoo. count ba15 lance of $87,040 among participants in the entire EBRI6 /8 IC .5I% 401(k)
11% 68.3%
16 • W Avit ahdr ilabale w a als t w (- w ), wb .ic ori.or row ging /syst (-e)m , a /fnd iles/ loa 202 n r2e-p 09 ay /m 22 e 6-7 nt ppr .1 s (+ % -dc)p . lan-profile-401k.pdf.
than those in their thirties, forties, or fifties. In the database, a participant’s account balance is reduced in the year
14%
20s For Ne the ithe co r mp A ElB l le RI te no up r dEaB te RI fro - 9E 5m RF l .2 % the ob y be ie as or r-end ta 32020 k 2e .4s p %EB osit RI/ ions ICI on 401( 6spe 7.k 4)% cd ifi ac ta p bolic asey , sp er 4 e op 1 H .8osa o % lde lsn, . E Ba BRI ss, inv a 5nd 1it 3 e .Cop 5 s c %om eland me 2022. nt on th 5is 7. 4%
2004 1 204 167 204 18% 2,193
What’s Inside
Month-End Level
Consistent Sample
50s
d Wh atabaa se. t Doe The meds ia C n 401( on k) s pla ist n ace count nt Part balance aici mong p ta het cion onsist i e5nn 7t. 0 p 40 % articipa 1(k) nts w aPlan s $62,13s 4 at year-end 2020,
Figure A3
>2 to 5 154.1 48.3 76.1 47.3 877.0 76.8
I tha nt t r the oduc loan is o tion rigina ted, but repayment of the loan in the ensuing years contributes to account growth.
resea2005 rch. 223 189 146 2,393
480 Years of Tenure
Average
17
$158,361
The EBRI/ICI 401(k) database environment is certified to be fully compliant with the ISO-27002 Information Security Audit
The Cla4 r0 kc s , ha Jenge ffre y in a W. ny 20 indiv 22. H idua ow l A pm aretric ic ipa a Sa nt’v s 401 es 202 (k2 ) . pVa lanlle ay c cFor ount ge , ba Pla A: nc The e isV inf angua luenc rd e dG b roup y the , Va mngua agnitrude d Cs of ente trhe for se three
401(k) Plan Account Balances Among Consistent 401(k) Participants
nearly three and a ha>lf 2 tto im 5es the median account balance of $17,961 for participants in the entire EBRI/ICI 401(k)
> 2006 5 to 10 25177.3 27.2228 63.2 303 38.7 410.4 2,773 50.3
Ge “40 n1( ekr Pa lat n As e? set C Alloc ha atn ion, g A e ccs ou i ntn B 40 alance1 s, a (k) nd Pl L4 oa 01n (ka )A p cn a tirv t Accou ic itiy pa in 202 nt analy0” sisrn ept or tBa ed yelan ar-end c 20 e20 s , ac2 count 01 6 –
440The EBRI/ICI 401(k) database, which is constructed from the administrative records of 401(k) plans, represents a large
29% 25%
>5 to 10
N stao nd te ard s. Moreover, A v EB era Rg I eha 40s1 (okb ) ta pla ine n a dc c ao le un gt a bla o lap ninion ce for tha conts t is he ten me t 40tho 1(k)d p oa log rticyip us ane tsd b me y ag ee ts a the nd t ep nriv ure a,c yye a sta r-end ndards of the Gramm-
2007 273 261 215 $131,405 25% 2,975
fac3 tor 0ss re Re lat tir ive em to ent the Re st sea artrin ch. g a Acvca ount ilable b a ala t nc htte p. s:/ For /ins exa titm utp iona le, l.v a caont ngua ribut rd.c ion om of /ca ont giv en etn/da dolla m/irn a sm t/v ount angua prrod d-uc hae s/ s a ins light arge sr-
d ataSu base. gg ested Citation: Holden, Sarah, Steven Bass, and Craig Copeland, “What Does Consistent Participation in
b Aabout lance, a tss he et a Elloc BR atI ion, /IC an Id 4 loa 01 n a (k) ctiv it Da y re tsu abas lts for e the EBRI/ICI 401(k) database, which consists of a large
400 >10 to 20
cross section, or snapshot, of 401(k) plans at the end of each year. It is a cross section of the entire population of
2020
2008 285 233 -770 2,203
Leach-Bliley Act. At no time has any nonpublic personal information that is personally identifiable, such as a Social Security
30s grow 20s th ra ptdefs A w /2 llhe 2_ n Ta Ld _H de AdS_F to ull 4 a2 Re sm .0 p aor lle tr_ a 20 cc 22 ount .p1 d 0 ft..ha 6 n it would if a 46d .7ded to a large 2r9 one .6 . On the ot1he 98r. 6hand, investment 31 .5
32%
40 cross 1(k ) sect Plaion o ns Ge f 11.5 m ne >2r0 a t to e ? 3il 0C lion 401 hanges in 401 (k) plan p (k)a P rtla icn Ac ipant cs. This ount B a pla ap nc ee r s, 201 present 6– s a 20 2 long 0,” it Eudina BRI Iss l aue na ly Brsi ie sf , — no. the 5 82 ana , a lynd sis ICI
360 2009 256 206 431 2,718
401(k) plan participants, and it represents a wide range of participants—including those who are young and individuals
$97,072 $99,561
nu 1 mber, b> ee 2n t o tra 5nsferr >e 3d 0 to o 8r 8.s5hare d with EBR 28 I.. 8 61.3 39.9 448.0 53.0
The E $B 75RI ,35/I 8CI project is unique because of its inclusion of data provided by a wide variety of $87p ,0la 40n recordkeepers,
r eBe tur ca ns us of e oaf g the ive se n c pha erng cee nt sa in gethe pr o cd ro uc sse s la ecrtion ger sd , olla comp r inc aring rea a ses vera (or ge dae cc croeun ases) t ba la wnc he en s a co cro ms psound diffee re dnt on yeaa rla -e rg nd er c a ro ss ss e-t base.
By Sa Re of sea 40 ra1( h rckH h ) old P pe ar rspe te icn, ipa ctiv IC ntes w , I;v ol. ho Ste 29 mve a , int no. n Ba aine 2 (s d Ma s a, c rc IC count h 2023 I; an s e). ad ch ye Craaig r frCo ompela 2016nd, thr E oug BRI h 2020 — that was not included in
$81,140
2010 265 243 337 3,119
$78,008 $78,267
320 All
who are new to their jobs, as well as older participa$ nt 73 s a ,67nd 2 those who have been with their current employers for many
>5 to 10 51.0 14.4 50.6 32.4 244.5 36.2
Federal Reserve Economic Data (FRED). St. Louis: Federal Reserve Bank of St. Louis.
Age Group Tenure (years) 2016 2017 2018 2019 2020
Figure A4
I s 18n o ectio tt p he he na err m l pw s 2011 it rna e o ting v rp d ious ss, g ho the ts r re ow c a pa na ot n r h r tly le . si a a The 283 d t s of e tso lon a fal trhe eg s a e it a udina c fun co tiv nc c itt lu y l a ion o s of ion nap s ly f th a . si rFor ts t 250 ic e ipa r re e axa la cnt kt mp s t iv s in 40 ele he si , ze ne ac 1( w c of oun k ly )t fo he ptla rme bns daolla la dof nc prla v e a a ns s of d r -1 jy us w ing o 3.7 m tm uld si eze nt te ill s nd t— io o fn 401( tto rhe om p ull si vze e kdr ) o y of p w la la n t 3rhe n p ,g the 11 e 2 indiv a r atvic eipa ra idua gnt e l s
25%
Account balances are net of unpaid loan balances. Thus, unpaid loan balances are not included in any of 24% the eight asset
Participants in Their Twenties
280
years. For example, at year-end 2020 28% , 14 percent of 401(k) participants in the EBRI/ICI 401(k) database were in their
>10 to 20 29.4 5.1 40.5 24.4 137.9 24.2
20s All $5,118 $9,992 $13,227 $22,144 $31,400
2012 303 282 357 3,495
Average Asset Allocation of 401(k) Plan Accounts by Participant Age
Copyright Information: This report is copyrighted by the Employee Benefit Research Institute (EBRI). You may
accoun w cor ho t pbor ha ala ad t nc ions aec,c b ount tut o sm ws in t oa uld ll b he te us l l ine yus ea sno rses -ething nd —w 20 it a16 h a bo ut E vB a cRI r oie ns /I ty is C I tof e 40 ntly inv 1( e p kst a ) rt d m ic aet ip nt aa b tin a op se gt ions w and ork . e ers ac.h subse Similarly q,ue the nt a yg eg are r g thr ate oug avh ye eraga er - ae cnd count
account.
categories described.
20s 30s 40s 50s 60s All Consistent Memo:
Key Findings:
240
Holden, Sarah, Steven B >2a tss o , 5and Craig Cop 3e ,1la 60 nd. 2022. “4081( ,0k 28 ) Plan Asset A 11 llo ,9c 0a 3tion, Account 20, 9 B 6a 6lances, and3 L 0oa ,87n 4
twenties, while 14 percent were in their sixties (Figure A1); 18 percent of participants had two or fewer years of tenure
2013 $100,000 325 326 645 4,148
Percentage of 401(k) plan account balances
20 cop 20 y, (p ar int four , or -y e da ow r pnloa eriod d )t.his report solely for personal and noncommercial use, provided that all hard copies retain
balance would tend to be pulled down if a large number of participants retire and ro 26% ll over their account balances to other tax-
Sample EBRI/ICI
S&P 500²
40s All >5 to 12 08.5 6,40 34 .3 11,3 35 63 .6 14,2 43 45 .1 231 ,5 2 73 1.3 32,68822.2
200 19 2014 349 366 278 4,406
at their cA ur ctriv ent ity job in s, w 2020 hil .”e I C 4 Ip Re erc sea entr cha h P de m rspe orec t tiv ha en 30 ye 28, no. ar11 s of , a n tednur EBeRI (Fi Iss gur ue e B Ar2) ie. f, Pno. artic 576 ipant (N s in t ovem he b e cron ). si As vta eila ntb le at
This system of classification does not consider the number of distinct investment options presented to a given participant,
Altog S eou the rces a r, fromnd ye a Ty r-e pe nd s 2016 of Da thr ta oug h year-end 2020, the average 401(k) plan account balance a 4m 01ong (k) the group of
qualia fie ny d a ac nd coun all c tsop .$ 80 y,r 0ight 00 and other applicable notices contained therein, and you may cite or quote small portions of
This paper provides an update of a longitudinal analysis of 401(k) plan participants drawn from the EBRI/ICI 401(k)
2015 378 386 -1 4,377
>2 to 5 56.2 15.1 47.7 31.7 249.9 36.8
3
160 For all of the figures in this report, components ma24% y not add to the totals presented because of rounding. Figures
24%
www.ici.org/system/files/2022-11/per28-11.pdf and www.ebri.org/docs/default-source/e Dbartia -is ba su se e-
sa but mra ple the ar, re the bot ty h o pelde s orf a ond ptions longe pre r ste ent nur ede . dP la tha n n p Spoa ns rto icr ipa Cou ntnc s in il o tf he Ame ovric era a ll d 2021 ataind base icate ats ytha ear t -in end 2020 2020 , the . average number
Year-End 2016
consistent participants more than doubled (increasing by 103 percent; Figure 4), rising from $78,008 at year-end 2016
the report provided that you do so verbatim and with proper citation. Any use beyond the scope of the foregoing
d a 3t 0a sbase.2016 2016 A 399 ll 2017 23,828 391 2013 83,839 37335 2 ,4 01 16 9 54,886 2020 4,741 71,153
>5 to 10 40.1 23% 8.6 42.2 27.4 175.7 28.9
2
$60,000
120 AccA o1 t unt hr boug alanc h A es7 a a re re ne at va oila f un ble pa iid n th loa en ab pa ple andix. nces.
Several EBRI and ICI members provided records on active participants in 401(k) plans for which they kept
of investme brie nt f/fu eb nd ri_i ob p_5 tions 76 _k av-axs ilae bcle -29 fon r ov pa22 rticip .pdafnt . contrib Ba ution lance s dw Fa usn d 21 s among the more than 500 plans surveyed.
2017 429 425 Figure 1 763 5,486
to $158,361 at year-end >2 20 to 2 50 (Figures 2 a8nd ,90 7 A3). This trans 16la ,7t 8e 6s into a com 21 p,ound 627 annual av 3e 4,r8a 8g 3e growth ra4 t8 e, 8of 0819.4
requir >1 e0 s E toB 2 RI 0 ’s prior express 25.8 permis A si gon. e o2 fFor . 2 Pa rp tie crim pa is nsi tons, 3 4p .7 lease contact 2 E1 B.RI 9 at permissi1 ons@e 11.1 bri.org. 20.5
20%
16
80Although annual updates of the EBRI/ICI 401(k) database provide valuable perspectives of 401(k) plan account
2018 $40,000 464 474 -251 5,207
Bri 3 ghtS reccor op des for and y In ev ae r- se tme nd nt 2016 Comp thr aoug ny Ins h ye titute ar-e 2021 nd 2020 repo . rts These an av e pra lag n r e e of cor 28 dk inv ee ep se tme rs inc nt o lude ptions m ut in ua 2019 l fun , d and co a m n pa av nie era s, ge of
>5 tD oi s 1t 0ribution of 40 18 1,(5k 4)7 Account Ba 2l8 a,n 00 c7 es by Size o 3f 2 ,A 04 c2 count Balan 4c 8e ,248 63,899
B e Th ca isus M nu e ed mb it ahe ne r ais nnu low al c er rtha ossn se it cw tion ould s c ha ov ve er b p ea ern tic if ipa it me nts w rely it h re a fle w ctid ed e e ra mp nge loy of ee p turn artic oipa ver ta ion e nd re xpe tirerme ienc nt. e in 401 For exa (k mp ) p le la , ns if , 4 01(k)
percent ov >2e 0r tt ohe 30 four-year p 2e 0r.iod 9 (Figure 4). 0 The .7 median acc3 ount 4.2 balance among 19.7 this consiste9 nt 5 .g 6roup also grew, 18.3
14% 14%
2, 3
2019 499 519 1,074 6,256
Holden, Sara 1h, Daniel Schrass, and 10%Elena Barone Chism. 2023. “Defin ICE e d B oC fA ont USr ibut Corpion orate P lan Participants’ Activities, 2022.”
40balances, asset allocation, and loan activity across wide cross sections of participants, cross-sectiona GICsl ana anly d ses are not
>10 to P e 2 r0 centage of partic 4i0 p,a 2 n9 ts 8 with account b 5a 2 la ,1 n5 c7 es in specified 5 ra 4n ,8 g2 e7 s, year-end 202 70 7,044 95,852
21 inv ba enk stme s, ins nt o ur pa tions nce w com hen pa anie targ s, a et nd da te consu fundlt s ing uite fir is m cs. A ounlte thou d ag s h th a sing e E leB inv RI/I es Ctme I 40 nt 1(o kp ) tion. proje ct has collected data from
Equities include equity funds, company stock, the equity portion of target date funds, and the equity portion of
Report Availability: This report is available on the internet at www.ebri.or 4%g
m pla en anin spogns ful o rs an ca ha lyng sis of e the the ir s p eot rvic ent e ia pro l for vid e40 rs,1( ak ll) p p aa rtici rticpipa ants nt s t in o tho ac sc eum plaula ns tw eo ruld etir b ee m e exc ntlud ass ed e tfro s m m us the t e c xa ons mine iste nt the s a40 mp 1le (k.)
nearly tripling from $2 0$2 ,002,91 0 6 in 2016 to $62,134 in 2020 (a compound annual average growth rate of 28.3 percent)
2020 517 615 Ind900 ex³ 7,033
Target Date Company Memo:
Equity Non-Target Date Bond Money Other Stable
0well suite Id C It o Re esea xam rc ini h Re ng p the ort im (Ma parccth of ). A con vaila sisb te lent a tp a ht rt tic ps:/ ipa/ww tion in w.ic40 i.or 1(gk/s ) y pst lae ns m./f Cile ross s/2 02 sec 3t-ions 03/2 c 2ha -rp nge t-re in c csur om vey pq osit 4.p io dn f.
non–target date balanced funds. A target date fund typically rebalances its portfolio to become less focused on
50s 1996 thr A oug ll h 2020, the 2uni 3.4verse of data 1p .7 roviders v 1, 2aries 3fr 1.om 7 year to yea 2r0.. 0 In addition, the 98 .p 3lans using a 18.7 2 4
Consistent Sample in EBRI/ICI 401(k) Database Consistent Sample in EBRI/ICI 401(k) Database
20
plan account 2021s of participaN nt /As who maintained acc N ount /A s over all of the years bN e/ing A studied (consistent 7 p,a 97 rt 5icipants). For
(Figure 2). Ag e Group Funds Funds Balanced Funds Funds Funds Value Funds Stock Other Unknown Equities
4 Lifestyle funds maintain a predetermined risk level and generally use words such as “conservative,” “moderate,” or
Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22
40s $0 All 63,673 81,822 84,555 115,500 142,183
For the repg oro rt w otn h a the nd m ye oa re r- e fond cu s2016 ed onEB inco RI/ mICI e as401( it apk p)ro d aa ch tae bsa a se n, d s pe ae s s H eo sld th ee n ta erg t a el. t d2018. ate of the fund, which is usually
2016 in 2016 2020 in 2020
1
from year to year because the selection of data providers and sample of plans using a given provider vary, and because
>2 to 5 41.3 9.4 38.5 26.5 170.9 28.3
EBRp I/a IC rT It o ic 4ta 0 ula l1 c(o kr n ) tD ri pb a ruov tta iob n ide a ss ie nr c lu cda en ch both a em ng plo ey eov r ae ndr etm im plo ey. ee Re coc nor tribd uts w ions.e re encrypted to conceal the identity of employers and
20s 25.6% 58.2% 2.1% 3.4% 0.3% 1.6% 2.0% 1.8% 5.0% 80.6%
example, because of changing sa 20m 16ples of provide 201r7s, plans, and 20 p1 a8rticipants, cha 20nge 19 s in account 20 2 b0alances for the entire
“aggressive” in their name >2 tto o 5indicate the fu2 nd 2,’s 02 ris 0 k level. Life 3s 4ty ,3le 86 funds genera 39 ll,y 5 9a5re included in 58the ,483 non–target d 77 a,te 04 3
included in the fund’s name.
Holden, 2 Sarah, and Jack VanDerhei. 2002. “Can 401(k) Accumulations Generate Significant Income for Future
Annual Percentage Change in Total Return Index 1
Total benefits disbursed include both benefits paid directly from trust funds and premium payments made 17 by plans to insurance carriers. Amounts
40 5 Co 1( ns kis )t e pna t> rS 5 ta ic tm ipa op 1 lent 0 s join or le3a 2v .9 e plans. In ad6 d.it 3ion, the analy3 si 6s c .3 overs account 24 .b 3alances held 1in 401 39.4 (k) plans at 24.4
30s 35.0 45.8 2.8 4.9 0.7 2.9 3.7 2.6 1.6 80.8
Tabl A m Teong nu em e re p t he o loy ref f e e cC rs on es, o to si nt b s y ut te ee nt aw nt rs e g r ars e t oup the cod , c e indiv urre d so idua nt tha emp l 401( t bloy oth coul ekr )a p nd ad r tis ic b g ipa ee tne rnt ara c s e klleyxpe d d ov er riv ie ere nc d m e fro ult d m a iple w d iad yte e e a r ora f s. nge hire For of re p out eoarte cch p o dm fo aerr s, tic the oft ipa p e nt a n influ rticip , data a e nt. nc e Te d nu byr e
2 Particip >a 5n tto s 1 in 0 Their Forties 35,804 50,146 54,468 77,461 98,708
database are not a reliable measure of how individual participants have fared. A consistent sample is necessary to
bS a& laP nc 5e 0d 0² fund category.
exclude benefits paid directly by insurance carriers.
Asset allocation by age group is among the consistent sample of 3.7 million 401(k) plan participants with
45% Media Re n a tg iree : e s? ” I nv e st m e nt 4C 6o ym eap rs a ny I ns t it u t e P e r spe 45 yc et aiv rse 8, no. 3, a nd 5 E0 B RI yea I rs ss ue B r ie f , no. 25 41 (No 5 years vember).
>10 to 20 23.8 2.2 31.6 20.3 100.4 19.0
$62,134
participant 40s s’ curr $e 5nt 00 ,e 00 m 0ployers. Retireme 4nt 4.0 savings 3he 1.5ld in plans a 3.t2 previous em 6.5 ployers or 0.9 rolled ove4 r .5 into individua 4.l 9 3.1 1.3 77.0
3
will no inc t lude refle cdt athe te of yeb air rs >t 1 h, o 0 f tfr o p a om 2r0ticip whic ation h a in n a the 7g 9e , 6 401( g 50 roup k) p is la a nss if igne the 100 ,d 401( 2; 3 4 da kt)e p of lan hiw re a 1, s 0 2 fr a ,3 d om 9 d7 e d w b hic y the h a e te 1 mp 3 nur 7,loy 9e 00 err aa nge t a la iste ar ss 1d 6igne a 8,te 14 o 2 dr; if
the ICE r B eo la fA tions US C hip orpa orm atong e Ind e cx ont ³ ributions, investment returns, and withdrawal or loan activity. Participants who were
Introduc Thtiion s ca ................................ tegory includes interest, dividen................................ ds, rent, net gains or losses on................................ sale of assets, unrealized app................................ reciation or depreciation of ass.......................... ets, and other 4
accurately ga acco uge u nc t ha bange lance s, s s auc t thh a e es g nd o row f eatch h in yeaa r c fro count m 20 1 b6a tla hro nc ue gs, e h 20xpe 20. A rie genc gro ed u pb iy s indiv based idua on tl 401( he partk ici ) p pala nn p t's aa gr et icipants over
39.9% $50,055
21 >20 to 30 20.1 0.4 31.0 18.5 87.2 17.0
Available at www.ici.org/pdf/per08-03.pdf and www 2 .ebri.org/docs/default-source/ebri-issue-brief/1102ib.pdf.
GICs are 50s insurance company products tha 44t .6 guarante2 e4 .a 9 specific rate 3. 7 of return on 8the .2 investe 1.d 0 capital ov7 e.r 0the life of the 5.7 3.4 1.3 68.8
retirem ine cnt om e a c an cdount expen s (I se> sRA .2 T 0h s) e to b u 3 a lk 0 r e of tnot his c a inc teglude ory i1 s1 d n0 e ,tin t 2 in 1v 8 ehe stm a enna t ga ly insi s s. o 1r 3lo 3 s ,2 s8 es 2. 134,204 180,133 215,599
40% there are restrictions on participating in the 401(k) plan immediately upon hire.
young out erst or anding h aa t y d e 3 a fe loa 2 r-e .w 4ne n b dr 2ya 0ela 2a 0nc r.s e of ; fun tenur ds in t e expe he rp ie anc rtic eipa d the nt’ sla inv rge est st m pe ernt ce nt por inc tfolios reases ; and in a av ss ee ra t g ve a lue acc s a ount ttr ibut bala enc d teo bte hose tween
$35,241 31.5
time. $400,000
Note: The 4 consis >te 3n 0 t sample is 3.7 milli1 o7 n .48 01(k) pla $n 3 1 p,a 5rt 9i6 c ipan -0 ts. 1 with account balanc2 e9 s. a 3t the end of each y1 ea 6 r .f7 rom 2016 through 2 7 07 2. 07 . Participant age is age a 1s5 o .5 f
Sample of Consistent 401(k) Participants, 2016–2020 ........................................................................................... 4
60s 38.7 24.7 3.8 10.8 1.2 28.7 10.6 4.9 4.0 1.3 57.3
Estima 3tes through 2020 are based on the Department of Labor Form 5500 Research File.
contract.
18
$22,916
The year-end 2020 EBRI/ICI 401(k) database represents 11.5 million 401(k) plan participants.
funds. An account balance for each participant is the sum of the participant’s assets in all funds. Plan balances
ty he e a ye ra -r-e end nd i2016 ndicateda .nd year-end 2020. For example, the average account balance of 401(k) participants in their thirties
6 5 $17,587 $17,961
Holden, NoSa te: D ra ah, ta e a xcnd ludeJ pa lacnk s c Va ove nD rin$ g e 1 o r 7n he ,1 ly3 o i. 2ne 20 pa04 rtic. ipa “n C t.ontribut $16ion ,010 Behavior of 401(k) Plan Participants During Bull and Bear
35% The crosA sl- l s C eocntional sisten tEB SaR mI/ plICI e 401(k) database also shows that younger participants and those with shorter tenures tend to
50s $16,836 All 41 10 .8 6,038 27.4 21.1 830,839 3.6 133,0 89 .66 1.0 175,332 7.6 210,325 5.1 3.6 1.3 67.2
To explore the ful $3l 0im 0,0p 0a 0ct of ongoing participation in 401(k) plans, and to understand how 401(k) plan participants
Note: Funds include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled
401(k) Participants Can Accumulate Sizable 401(k) Plan Account Balances ............................................................. 4
So 22 urce: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project
A few key insights emerge from looking at the 3.7 million consistent particip 18a .4 nts in the EBRI/ICI 401(k)
rose a19 re N8.6 /A c onst = np oe t r a ruc v cae iltnt ae bd l e( a a s t 31he .5 su pem rc eof nta cllom pap round ticipa nt annu bala al a ncv ee s in t ragehe gr p ow lat n. h r ate) between the end of 2016 and the end of
60s Other stabA lell value funds inc 1lud 9.9e s 6ynthetic GICs 1.2 , which consist 2o 5f .6 a portfolio of fixe 16.d 4-income securiti 77e .4 s “wrapped” with a 15 .4
16.0 Markets.” Nationa >2 tol Ta 5 x Association P 38,3r 4oc 4 eedings, N5 ine 4,1t6 y7 -Sixth Annua 59 l C ,2o 80 nference on 8Ta 2,1xa 22tion, Novem 10 b3e ,8 r 913 21– 6.0
have lowe2r 0401( 16 EBkR ) I/b IC aIla 40 nc 1(e ks ) D tha atan batho se se who are older or have longer tenures. See Holden, Bass, and Copeland 2022.
43.5 21.3 6.1 8.2 3.1 5.8 5.9 5.1 0.9 67.4
investment product primarily invested in the security indicated. Percentages are 1 d4o .2 llar-weighted averages. See
have fared over an extend 1e 3d .7 period, it is important to analyze a consistent group of participants (a longitudinal sample)
30% Sources: Investment Company Institute and Departmen 1t2 o.f0 Labor
$200,000
database ov > 12 0. 4 to er 5the four-y2 ea 8.5 r period from 4 y .0ear-end 2012 6 8 to .8 year-end 2 19 0.2 30. 105.3 19.7
2020 guarante (Fig eur (ty e p4ic )a . llBye b ca y us > a5 n e t ins oy oung 1ura 0 nc ee r p ca omp rtica ipa ny 51nt ,o 72 s’ r 5aa b cc aount nk) to b p aro la 68nc v ,7 id 6 ee 6s t be ene nde fit dp taoy 7 me b 3e ,1 nts sm 01 a alle cco r rd (Fi ing g9ur .to 8 9e 9 s 3 a ,the 651 pnd lanA a3 t) b , o the o1 k2 ir v 3 ,a 8lue 20.
Changes in Consistent 401(k) Participants’ Account Balances .................................................................................... 8
2016 2017 2018 2019 2020
15, F 20 igu 03 re, AC 4h fo ic r a ag do: ditio 44 na–l 53 de. taW il.ashington, DC: National Tax Association.
7.5 7.5
Figure A2 6.9
7 6.5
who have been part of the database for an extende 6.d 0 period. This paper provides an analysis of the account balances of
Contribution amounts and contribution rates tend to increase with age and earnings. See Figures A3 and A4 in Brady and
Investment Options
>5 to 10 >10 to 2 20 7.2 96,64 7.25 1192 ,6 9 5.8 3 1222 ,3 0 0.1 1 160 1,0 96 82 .3 193,683 19.9
contributions produced significant percentage growth in their account balances. In contrast, the average account
2.1 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project
25% 1.4 Year-End 2020
23 Consistent Sample Had Longer Tenure Than Participants in the EBRI/ICI 401(k) Database at Year-End 2020
$100,000 22.2%
Ba S co kme ground reco rd Fakcete or pe s I rsnfl sup uepnc lying ing d 40 ata 1( w k)e re Pla un n As able se to ts ................................ provide complete asset ................................ allocation detail on certa ................................ in pooled asset classe .10 s
3.7 million consistent participants in the EBRI/ICI 401(k) database over the four-year period from year-end 2016
Figure A6
Bass • 2021 The >1 o0r td a oa v t 2 ea 0 r a ta gb ele > 40 s 2 0in 1( to k Int ) 3 2 0 1 p e.rna la 1n a l Rce cv ount enu1e 6 b 3 S a ,e 9 la 2rv 7 .nc 3 4ice e ,for Sta c tis onsi tics 19 st 6 oe 2 ,f 9 6 nt 7 Inc .3 3 po am rte ic ipa Divnt is1 ion s r 971 ,ose 8 202 7 2.8 4 e 1a . ch year2 5 fr9o 8 ,0 m 36 . 8 7year-end 20 3016 6,9 24 16.4
Holden, Sarah, Jack VanDerhei, Luis Alonso, and Steven Bass. 2018. “401(k) Plan Asset Allocation, Account Balances,
balance of older participants, or those Pw erit ce h long ntage oe f rp a te rtnur iciB pa ae n la s ts — n c bb e y d ot y e Fh o a urn sd fo sfw te hom nure, tye ende ar-en dd to have larger balances at the
19
Years of Tenure
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
In the EBRI/ICI 40 M 1( > o 3 k s 0 )t d 4a 0t1 a(b ka )se, Pla inv n P e 2a 1 st r 5m t ,2 ic 6 ei0 nt pa n op tst ion Are s ia 2 nr 5 e 3 P ,6 g la 2 rn 1 oup s W ed it h int Eo m 2 e p 5ight l 3o ,4 y6 e 0 b r rC oa od n tc ra ib te ug 3 ti 2 or o 7n ,ie 6s 3 s. 4 Equity fun 382 d,s 455
20% throug Noh te:y > Ae 2 ca 0 co rt- uo e n tn 3 bd 0 a la2020 nces a.r e par1 ti7 ci.p 6 ant account balanc0 e. s8 held in 401(k) plan2 s 5 a.t 6 the participants' cu1 r5 re.n 7t employers and a7 re 2 n .2 et of plan loans. 14.6
$0 -0.6
through year-end 2020. Overall, the average account balance increased at a compound annu -1.a 0l average growth
A Bpac pendix kgr ................................ ound Fac -1.5tors Infl ................................ uencing 401(k) ................................ Plan Assets .............................................................12
8 -2.2
beginning and of L the oa n Ac study p tivite yr in iod20 tha 16n younge .” ICI Resea r wo rc rh ke P re s or rspe those ctive w 24 it, hno. shor 6, tearnd tenu EBrRI es — Iss sh ue ow Be rd ie fm , no. ore 458 mod( eSe st p pte erm ce bnt era )g . e
At year-end 2020, 60 percent of non–target date balanced fund assets were assumed to be invested in equities (see
-4.4 15.8%
Retirement savings held in plans at previous employers or rolled over into IRAs are not included. See Figure A3 for additional detail.
2016 2017 2018 2019 2020
assets could be identifie Percd e. n tage of active 401(k) participants in plans with employer contributions by plan assets, plan year
consist > of 30pooled investm 15e 4% .7 nts primarily inv -0.e 3sted in stocks2, 3inc .1 luding equity 1 3m .9utual funds, b 6a 1nk .7 4% collective trusts, 12.8
5% 2, 3
>30 rate of 19.4 percent from 2016 to 2020, rising from $78,008 to $158 7% ,361 at year-end 2020.
2006 2007 2008 2009 2010 2011 2012 2013
GICs and
15%
Aggrega 1t 3 A e .v 1 d % aa ila ta b le on a 40 t w 1( wk w ) .ic pli.or ansg p /s ry ov stide em /f ins ile ight s/a tint taco hm the en p ts/ oss pe ible r24 inf -06 lue .pd nc f ea of nd ew ac w h o w.e f th bri.or e fa gc/do torc s t s/ha detfa cult aus -sour e cha ce nge /ebs in ri-
g Inve row sS ttme h ou rin a cnt e: T Comp cac bount ulatio an ny s si fze rIns om ( E tit Fi Bg ute Rur I/IC ,e IQua P 4a )r. trte ic For iprly an e t- D L xa o ire ng m ctp e -d Te le R ,rm e t tihe reMu m e anv tua t e Pr la a l ng Fund D ea ta ac C c As oount lle sc ett io Comp nb P arla oje nc c otseiti of on40 ). Th 1(k e) a p lla or ctaic tion ipant tos in t equiti he es ir in sixt taie rgse t date
Re 6fe 0srences ................................ All ................................ 120,154 ................................ 144,079 145 ................................ ,812 183,152 ........................... 213,180 17
12.0%
Participants in Their Sixties
10%
11% 9%
Samp lifele ins of urC anc onsis e sep te ant rat e 40 ac 1( count k) P s, a art nd icipant other s T pa ,oole r2016 getd D a inv t– e 2020 estme nts. Similarly, bond funds are any pooled account Com pany Memo:
2014 E 2 q 0 u 1 i5 ty 2016 2017 No 2n 0-1 T8 arge2 t 0 D 1 a 9te 20B 20 ond Money Other Stable 11.4%
-15.4
> •2 0 toThe 30 med1 ia 0n 401( .4% k) plan account balance for consistent participants increased at a compound annual average
$500,000
account balances: cont>r2 ibut to i5ons, investme6 nt 0, 3r3 e3turns, and w 7it 7hdr ,512awal or loan a 80,6 c1 tiv 7 ity. Betwee 10 n3 y ,8e 0a 7r-end 2016 12a 3nd ,851 year-
inc fund resa v sed arie is su 77 s w e .4 - ith b p rie e the rf/ ce e fu nt brnd i_i (a sb ’ 15 _4 targ .4 58 e p _k t e dr -a c upd te ent s.a For c te om -10 ta psep ound rget t18 d a a.p te nnu d fu 1, f.a 2 nd l asv , einv rag es eto grs row we th r re a at se sume ) betdw to ee b n ye e in aar -fu end nd 2016 whosea - 1 nd ta 8rg .1yeet ad ra -e te nd 2 4
9.0%
All All 82 .5 4 % .4 2.6 32.0 16% 20.5 103.0 19.4
10% Age Group Funds Funds Balanced Funds Funds Funds Value Funds Stock Other Unknown Equities
Notep sr ................................ imarily invested in bond ................................ s. Balanced funds ar................................ e pooled accounts inve ................................ sted in both stocks and ................................ bonds. They are ..18
6.9%
>10 tog 2r0 owth rate of 7.28 3%.3 percent over the period, to $62,134 at year-end 2020.
Among the 401(k) par> tic 5 ipa to 1 n 0ts with account 63,s a 090t the end of 82016 0 7,242 in the EBRI 8/I 3,C 81 I9 401(k) data 1b 08 a,se, 403 3.7 million a 130 r,e 1 7in 5 the
Note: Age and tenure groups are based on participant age and tenure at year-end 2020. The all category includes participants with missing tenure information. Account
201 e w 1nd as ne 2020 a2 re 0s 1 (t 2 the to the late 2 ir st 065th 1 3 data b irthd av 2a 0ila 1 a4yb . le Al)l, oc c 2a ont 0tion 15ribut to 5 e ions .q 6 2% uiti 01 6 te o s 40 in 1 ta (2k rg 0)1 e 7 p t la dns ate ha fu 20v nd 1e 8 sa v ise a ra s2 s g0 ume e 1d 9 $4 d to 77 v 2b a 0ill ry 20 ion a with y inv e 20 ae 2 rs 1 , to and r a gbe 2 e .0 ne Th 22fit e s eC q po uity am id p ound
2020. Investment returns, rather than annual contributions, generally account for most of the change in accounts with
20s 33.1 53.4 4.4 4.5 0.3 1.1 1.2 1.4 0.7 86.4
$400,000 4.6%
5.2% 3.9%
classified into t 3wo subcategories: target date funds and non–target date balanced funds. A tar22% get date fund
>10 to 20 93,544 24% 113,287 3 1.1 45 % ,839 146,329 171,837
balances are participant account balances held in 401(k) plans3 a .9 t % the participants' current employers and are net of plan loans. Retirement savings held in pA la vn esr a ag t e
5% consi >5 s tte o nt 10 sample. These consistent participants had accounts at the end of each year from 2016 through 2020; they
ICE BofA US Corporate Index. Atlanta: ICE Data Indices, LLC. 2.6%
3.1%
p (inc ortion luding wa 30s sr ollov estima ers) te dha us ving e a v the era ind geus d $508 try av 3 e 8 b.ra ill 8 ion (Fi ge equity g4ur 4 .p 6 ee A rc 5e ). nta I2 nv g .6 ee % st fo 4.m r 0 the ent ars estig urne ns 5d .— 0 ta int rge 3 e.rt 0 e % d st 0 a., te 6d iv fuide nd,nds, whic 2.a 2 hnd wars e a cliz alceula d 2 a t.e nd 2d 1.9 0.8 84.0
larger balances. 28%
2.2%
1.6%
1.8%
Annual
previous employers or rolled over into > 2 IR 0A ts o a 3 re 0 not included. 153,581 180,666 182,152 228,726 264,529
Yout n yg per ically 40 r 1e(k ba) p lanc ar eti s it cip s p aor nts tfolio to b or thosee w com it eh le sss m a foc ller use yd ea on g r-en row d 2 th a 01nd 6 ba mlor ae n c foc esus exp ed erien on inccom ede h aig s h iter approaches
9696969696969696
$300,000 9595
95
mak>e2 up to 5a longitudinal sample, whic 94 h removes the effect of pa 94 rt 94 icipa 94nts and plans entering and leaving the database.
40s 46.7 32.8 2.3 6.9 0.9 3.9 3.4 2.3 0.9 77.4
using the Morningstar Lifecycle Allocation Indexes (see M 93orningstar 2020). 93
unrealized asset appreciation/depreciation—vary sig 92 nifica92 ntly from year to year. For example, they provided a Growth
9291 9292 92
Source0% : Tabulations from EBRI/ICI Participant-Directed 91 Retirement91 Plan Data Collection Project 91 91
Figures >30 259 91 ,009 299,599 298,843 367,938 418,92890 91
90 8990
89 8989 89
percentage growth in account balances compared with older participants or those w 88 ith larger year-end
Interana nd l Re pav ss ee nue s the Se tra vric ge e, t St daatteis o tif th cs of e fun Incd om , w ehic Div h is usu ision. 2 a02 lly1 i. nc SOI lude Ta d x Sta in the ts: I fun ndivi d’s na dua ml I e. nfor Nonm -ta atrion Re get dattur e88 n For b88 alanc me W d -2
35%
86 Rate,
0 to 2 50s 44.7 28.6 2.8 8.8 1.0 87 6.6 87 4.0 2.7 0.8 67.1
Inve