Summary
In this study, public-sector defined-contribution (DC) plan participant savings behaviors are analyzed. Specifically, balances, contributions, loan usage, and asset allocation by participants’ age and tenure are examined. Some of the key findings include:
Account Balances
- The average account balance for public-sector DC plan participants increased with age and tenure. For instance, the average account balance for participants in their 40s with zero to two years of tenure was $6,185, compared with $69,623 among those with 11 to 20 years of tenure in the same age group.
- The median account balance ranged from $1,938 for those in their 20s to $31,730 for those in their 60s.
Contributions
- The average and median employee contribution amounts increased with age. For instance, the average employee contribution was $1,806 for participants in their 20s, compared with $4,184 and $5,559 for those in their 40s and 60s, respectively.
- The average and median employee contribution rates (employee contributions divided by salary) were 6.4 percent and 3.7 percent. This rate increased with age, from 3.5 percent for those in their 20s to 8.4 percent for participants in their 60s.
Loan Usage
- Among participants with access to plan loans, the percentage of those who take loans from their plans by age was hump-shaped, going from 2.9 percent of participants in their 20s to 12.9 percent of participants in their 40s and decreasing to 6.1 percent of participants in their 60s.
- Participants in their 50s had the highest average outstanding loan balance of $11,386, but their loan balance also amounted to 22 percent of their total account balance, the second lowest percentage across the age groups.
Asset Allocation
- Participants in their 20s had the largest allocations to target-date funds (71.3 percent).
- Allocations to bond funds, balanced funds, and money market/stable-value funds increased with age. For instance, participants in their 60s allocated 23.3 percent to stable-value funds, compared with 1.9 percent for those in their 20s.