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 increased with both age and tenure. For example, among participants with two years or less of tenure, those in their 20s had an average account balance of $2,493. This amount rose to $17,350 for participants in their 60s. Furthermore, the average account balance for participants in their 60s increased significantly to $112,987 when they reached between 11 and 20 years of tenure.
Contributions
- The average and median annual employee contribution amounts, as well as the contribution rates (employee contributions divided by salary), increased with age. For example, the average employee contribution was $1,945 for participants in their 20s, rising to $4,751 for those in their 40s and $6,404 for those in their 60s.
Loan Usage
- Among participants with access to plan loans, the percentage of those who took loans from their plans by age was hump shaped, going from 1.9 percent of participants in their 20s to 11.1 percent of participants in their 40s and decreasing to 5.4 percent of participants in their 60s.
- While the average outstanding loan balance increased with age, peaking at $13,088 for participants in their 50s, the average loan as a percentage of the account balance decreased with age, starting at 34.1 percent for those in their 20s and dropping to 19.3 percent for those in their 60s.
Asset Allocation
- Participants in their 20s had the largest allocations to target-date funds (74.4 percent).
- The allocations to bond funds, balanced funds, and money market/stable-value funds increased with age and tenure. In contrast, equity fund allocations rose from 20.6 percent for participants in their 20s to 51.8 percent among those in their 50s, then decreased to 46.2 percent for those in their 60s.