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401 (k)s after the fall: changes in account balances in the wake of the financial crisis, 2007-2011.

ALONG FOR THE RIDE
Average 401(k) account balances

2007  $76,534
2008  $49,912
2009  $77,983
2010  $91,038
2011  $94,482


WHO'S IN?

At year-end 2011, 12% of 401(k) participants in the EBRI/ICI 401 (k) database were in their 20s, while 10% were in their 60s

16% of participants had two or fewer years of tenure at their jobs while 5% bad more than 30 years

PERCENTAGE OF PARTICIPANTS BY AGE

       20S   30S   40S   50S   60S

2007   12%   25%   30%   24%    8%
2011   12%   23%   28%   26%    10%

PERCENTAGE OF PARTICIPANTS BY YEARS OF TENURE

        0-2   >2-5   >5-10   >10-20   >20-30   >30

2007    19%   19%    25%      21%      11       5%
2011    16%   22%    23%      24%      10%      5%

Note: Table made from bar graph.


IN ANY GIVEN YEAR, THE CHANGE IN A PARTICIPANT'S ACCOUNT BALANCE IS THE SUM OF THREE FACTORS:

1) NEW CONTRIBUTIONS BY THE PARTICIPANT OR THE EMPLOYER OR BOTH.

2) TOTAL INVESTMENT RETURN ON ACCOUNT BALANCES, WHICH DEPENDS ON THE PERFORMANCE OF FINANCIAL MARKETS AND ON THE ALLOCATION OF ASSETS IN AN INDIVIDUAL'S ACCOUNT.

3) WITHDRAWALS, BORROWING, AND LOAN REPAYMENTS.

MEDIAN 401(k) ACCOUNT BALANCES TO TOTAL RETURN INDEX

        Median 401 (k)   Annual percent in
        balance          S&P 500 total return index

2007      $27,243              5.5%
2008      $15,705
2009      $33,385             26.5%
2010      $40,390             15.1%
2011      $42,082              2.1%

Note: Table made from bar graph.

THE POWER OF EQUITY 401(K) PARTICIPANTS CONCENTRATE THEIR ACCOUNTS IN
EQUITY SECURITIES.

On average, about three-fifths of 401 (k) participants' assets were
invested in equities (through equity funds, the equity portion of
target date funds, the equity portion of non--target date balanced
funds, or company stock). Between year-end 2007 and year-end 2011,
the allocation of consistent participant balances to equities, edged
back from 42.9% of participants with more than 80% of their accounts
in equities to 38.4% at year-end 2011. The percentage of consistent
401 (k) participants without any allocation to equities remained
unchanged at 11.8%.

Year   Equity   Target-date   Non-target date   Company   Other
       funds       funds       balance funds     stock

2007   49.5%       5.5%            7.9%          10.4%    26.7%
2011   39.3%       12.0%           6.0%          9.8%     32.9%


IT PAYS TO BE CONSISTENT

At year-end 2011, the average account balance among consistent participants was 60% higher than the average account balance among all participants. The consistent group's median balance was about two-and-a-half times the median balance across all participants.

IT PAYS TO BE CONSISTENT--PART II

At year-end 2011, 13% of consistent contributors had more than $200,000 in their 401(k) accounts at their employers, while another 15% had between $100,000 and $200,000. In contrast, in the broader EBRI/ICI 401(k) database, 7.5% had accounts with more than $200,000, and 9.2% had accounts between $100,000 and $200,000.

Account balance

$100K-$200K    9.2%   15%
>$200K         7.5%   13%

Note: Table made from bar graph.


BOUNCE PASS

[arrow down] 35% AVERAGE AMOUNT ACCOUNT BALANCES FELL IN 2008

[up arrow] 5.4% AVERAGE ACCOUNT BALANCE COMPOUND GROWTH RATE INCREASE, 2007-2011

$94,482 AVERAGE ACCOUNT BALANCE, YEAR END 2011

$42,082 MEDIAN ACCOUNT BALANCE, YEAR END 2011

COMPILED BY DENIS STOREY AND DESIGNED BY JOE SCHLUE

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Title Annotation:regulatory round up
Author:Storey, Denis
Publication:Benefits Selling
Date:Dec 1, 2013
Words:554
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