Average 401(k) Springs Back in April

After a rough March, the average 401(k) regained some ground in April.

 

In March, the average 401(k) account for younger (25-34), less tenured (1-4 years) workers, plunged 7.3%. Older (age 55-64) workers with more than 20 years of tenure also shed 7.3%, according to estimates from the nonpartisan Employee Benefit Research Institute (EBRI).

 

However, April was a different matter; in the best month for the Dow Jones Industrial Average and S&P 500 since 1987—and the best April since 1938, the average 401(k) for the younger, less tenured demographic rebounded 9.8%. The average 401(k) account of older, longer-tenured workers regained 8.1%, according to EBRI estimates.[1]  

 

Those recoveries notwithstanding, the average 401(k) is still down year-to-date. For the younger, less-tenured cohort, the average balance is 1.1% lower than at year-end. While the older, longer-tenured cohort is down 3.3%. Of course, the older cohort’s average balance is generally more influenced by market moves than contributions, while contributions have a larger proportionate impact on the younger group, which typically has smaller account balances.

 

It’s said that April showers bring May flowers… here’s hoping.

 

 

[1] EBRI’s analysis is based on the organization’s huge database of some 26 million 401(k) plan participants in more than 101,000 employer-sponsored 401(k) plans representing nearly $2 trillion in assets. 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.