Average 401(k) Continued Climbing in Q2

U.S. stock markets finished at, or near, record highs in the second quarter—guess what that meant for the average 401(k) balance?

The S&P 500 closed out the quarter at 4297.5, marking the benchmark index’s 34th record close of the year, according to the Wall Street Journal, which also notes that that index is now up 14.4% in 2021, representing the largest first-half gain in a year since 2019. As for the Dow, it closed at a remarkable 34,502.51, and although the tech-laden NASDAQ slipped back from Tuesday’s record close, it ended the quarter just 0.2% from it—and still rose for the fifth consecutive quarter.

As for the average 401(k), that of older (age 55-64) workers with more than 20 years of tenure is now 10.4% higher year-to-date, while that of younger (25-34), less tenured (1-4 years) workers has increased 16.3%, according to estimates from the nonpartisan Employee Benefit Research Institute (EBRI).

Those second quarter statements should bring good news as well, with the average 401(k) of the younger cohort up 8.9% in Q2, and that of the older, more tenured group having risen 6.7%. The older cohort’s shift (they have larger balances) being generally more influenced by market moves than by contributions.

For those tracking the monthly results, in June the older cohort’s average 401(k) gained 2.0%, while that of the younger, less tenured was up 2.6%. That came on top of an increase in the average 401(k) of younger (25-34), less tenured (1-4 years) workers of 1.4% in May, following a 4.7% rise in April. The average 401(k) of older (age 55-64) workers with more than 20 years of tenure was 0.07% higher in May, after a 3.9% bump the previous month.