President Trump is tweeting about 401(k)s again — this time as proof of an economic surge.
Over the weekend, the president hit a remarkable number of points in a Twitter post (but then, they’ve expanded from the 140-character limit), as he directed followers to “Look at your 401-k’s since Election.”
A little more than a month ago, the President tweeted that 401(k)s would be left alone by tax reform – and, with the possible exception of a provision regarding pass-through entities, that looks to have been accurate.
And with regard to his latest tweet, at least year-to-date, he has a point. A new analysis by the non-partisan Employee Benefit Research Institute (EBRI) finds that among older workers — those aged 55-64 with more than 20 years of tenure (and consistent participation since 12/31/14) — the average 401(k) balance is up 18.2% in 2017 (through Nov. 30).
As for younger (age 25-34), less tenured (1-4 years) workers, that average 401(k) balance among consistent participants is up nearly 40% (that’s not a typo) since the beginning of the year.
Of course, younger workers have smaller balances, and that means that contribution flows, rather than market moves, generally have a larger effect on the rate of increase. On the other hand, older, higher tenured participants tend to have larger account balances, and the movement in average balance tends to be more influenced by market moves than contribution flows.
Regardless, year-end 401(k) statements could feel like a real holiday bonus.
The analysis, based on EBRI’s huge database of some 24 million 401(k) plan participants in 64,619 employer-sponsored 401(k) plans representing $1.536 trillion in assets, is unique because it includes data provided by a wide variety of plan recordkeepers, and therefore portrays the activity of participants in 401(k) plans of varying sizes — from very large corporations to small businesses — with a variety of investment options.
EBRI has produced estimates of the cumulative changes in average account balances — both as a result of contributions and investment returns — for several combinations of participant age and tenure. You can access reports of both cumulative and monthly average account changes here.