The average 401(k) participant’s account balance rose each year from 2010 through the end of 2017, before decreasing in 2018. The Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) used their database of 1.9 million consistent 401(k) participants to analyze the period of 2010 to 2018.

For consistent participants, the average 401(k) plan account balance increased at a compound average annual growth rate of 13.9% from 2010 to 2018. This was an average increase from $63,756 to $180,251. The median 401(k) account balance increased at 17.3% over the same period, to $90,015 at the end of 2018.

Two-thirds of 401(k) participants’ assets were invested in equities. In the equities category are equity funds, equity portions of target-date funds, equity portions of non-target-date balanced funds and company stock. The study’s authors found that younger participants in 401(k)s had a higher allocation to equities than their older counterparts. Fourteen percent of participants were in their 20s, and 13% were in their 60s.

To provide some background, the study’s authors add, “Between year-end 2010 and year-end 2018, the U.S. stock market generally rose, which tends to provide a boost to 401(k) plan accounts holding equities.” Since two-thirds of participants’ assets were in equities, this gave more significance to the increased balances.

Regarding tenure, the average participant had at least eight years of being invested in their 401(k) account in 2018. Ten percent of participants had five years to 10 years of tenure, 54% had 10 years to 20 years and 36% had more than 20 years.

The study’s authors noted that younger participants or people with shorter tenures at their current jobs had smaller account balances. However, older participants or people with longer tenures at their jobs had higher account balances.

Source: “What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Plan Account Balances, 2010–2018,” by Sarah Holden, Jack VanDerhei and Steven Bass; Investment Company Institute, October 2020.

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