The average account balance among American workers who consistently held 401(k)accounts over a seven-year period increased at an annual rate of 8.7%, says a study by the Employee Benefit Research Institute and the Investment Company Institute.
Average account balances rose to US$121,202 at the end of last year from $67,760 at year-end 1999 among participants who maintained accounts for the entire period.
Among the same group, the median account balance increased to $66,650 at year-end 2006 from $24,898 at the end of 1999—an annual growth rate of 15.1%.
“The average 401(k)participant had a good year in 2006 because the majority of 401(k)assets are invested in equities and the stock market did very well last year,” says study co-author Jack VanDerhei. “The data show that most workers who have continued to save and invest in their 401(k)retirement plans over the past several years have done well, despite the ups and downs in the stock market.”
The study notes that the averages vary widely by age and job tenure, since new contributions tend to have a greater impact on younger, shorter-tenured workers’ 401(k)accounts and market returns tend to have a greater impact on older, longer-tenured workers’ accounts.
To read the report in a PDF format on the Employee Benefit Research Institute’s website, click here.
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