Was October a Trick — or Treat — for the Average 401(k)?

October is a month long associated with significant market volatility – so did this one bring tricks – or treats – for the average 401(k) balance?

Well, despite losses on Halloween, the major stock market averages posted solid gains for October. The Dow and S&P 500 gained 0.3% and 0.5%, respectively, for the month, while the NASDAQ closed up 0.6%, according to Dow Jones.

It was also a(nother) good month for the average 401(k) balance. According to estimates – drawn from actual 401(k) accounts and investment allocations – from the nonpartisan Employee Benefit Research Institute (EBRI), the average 401(k) balance for those aged 25-34 with 1-4 years of tenure gained another 3.0% (it was up 31.2% through Sept. 30), while the average 401(k) balance for older, more tenured workers (those with more than 20 years of tenure, aged 55-46) – balances that are more likely to reflect the impact of the markets than contribution flows – climbed another 1.4%. At September’s close that average balance was up 17.8% for the year.

EBRI’s database of some 27.1 million 401(k) plan participants in nearly 111,000 employer-sponsored 401(k) plans representing some $2 trillion in assets is unique in that 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.