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November No Turkey for the Average 401(k) Balance

Practice Management

October might have been a scary month for your 401(k) — but November was a month for giving thanks.

According to estimates from the nonpartisan Employee Benefit Research Institute (EBRI), the average 401(k) account balance for younger (25-34), less tenured (1-4 years) workers jumped 3.2% in November, reversing October’s 3.7% tumble — and leaving it up 24.9% year-to-date.

Among older (age 55-64) workers with more than 20 years of tenure, whose average balance is generally more influenced by market moves than contributions, the average 401(k) balance was 1.5% higher, rebounding from the previous month’s 4.2% decline. Year-to-date, that average balance is 4.7% higher.

The EBRI estimates are based on the actual contribution records and investment choices of several million consistent participants in the EBRI/ICI database.

That analysis, based on EBRI’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, 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.

The EBRI/ICI database includes demographic, contribution, asset allocation and loan and withdrawal activity information for millions of participants. 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 find those results here.