Saving for Retirement – 401k Stats & Facts

A few decades ago, many retirees in the US could rely on traditional pensions. However, times have changed, and now most Americans invest in defined contribution plans, such as 401k, in order to save some funds for retirement. Below you can find some useful 401k stats that may help you create your own retirement strategy.

A Quick Overview of the Key 401k Statistics

  • The average 401k account balance was $102,900 in Q1 2018.
  • 91% of workers with 401k plans said that payroll deduction helps them save.
  • About 90% of employees are eligible for their employer’s defined contribution plan.
  • The average company contribution was 4.8% of payroll in 2016.
  • 41.2 million American households have people owning a 401k plan.
  • The 401k plan had assets worth 5.3 trillion dollars in 2017.
  • 80% of workers who are offered a 401k or similar plan decided to participate in one.
  • Only 1 in 4 Baby Boomers believe that their savings will last throughout retirement.
  • About 28% of employers offer a 401k or similar plan to their part-time workers.
  • 73% of companies offer a matching contribution as part of a 401k or similar plan.

401k Stats3D illustration by Quince Media

1. The average 401k account balance was $102,900 in Q1 2018.

(Fidelity)

401k savings statistics show that there has been a steady increase in the average 401k balance since 2013, except for Q4 2017 when there was a slight drop. In comparison to the average 401k balance in Q1 2013, which was $81,200, the one in Q1 2018 increased by about 25%.

2. The total 401k savings rate was 13.2% at the end of Q1 2018.

(Fidelity)

The total savings rate for 401k investors includes both an employee’s contribution rate and an employer’s 401k match. According to 401k statistics from 2018, 36% of Millennials increased their contribution rate from 2017 to 2018.

3. The average 10 years’ account balance amounted to $290,100 in Q1 2018.

(Fidelity)

Considering this statistic, we can notice that long-term saving pays off. Therefore, it’s recommended to make consistent contributions in order to build a large enough retirement nest egg.

4. 157,000 people had at least $1 million in their 401k account at the end of Q1 2018.

(Fidelity)

According to Fidelity, most of these savers have been contributing to their accounts for about 30 years. So, these 401k facts from 2018 prove that taking a long-term approach to retirement preparations is worthwhile.

5. In Q1 2018, the average Roth 401k contribution rate was 6.7%.

(Fidelity)

A traditional 401k plan is funded by pre-tax money, meaning that you will have to pay taxes when you decide to withdraw your funds. On the other hand, you can contribute after-tax money to a Roth 401k plan.

6. 91% of American workers with 401k plans said that payroll deduction helps them save.

(Investment Company Institute)

401k statistics from 2017 show that workers are satisfied with 401k plans and their features as they make it easier for them to save money for retirement.

401k Stats

7. 82% of Millennial workers make contributions to the 401k plan.

(American Benefits Council)

Interestingly, Millenials contribute to 401k plans even more than Generation X and Baby Boomers although they face many obstacles to saving, such as debts and low salaries.

8. 97% of plans use personalized communication.

(American Benefits Council)

Since everyone has different retirement strategies and goals, it’s most effective to use an individualized approach to communications with participants.

9. About 90% of employees are eligible for their employer’s defined contribution plan.

(PSCA)

This survey conducted by the Plan Sponsor Council of America (PSCA) included major US employers, and it reflects 401 k participation statistics for 2016.

10. 38% of 401k plan participants were in their twenties and forties in 2016.

(Investment Company Institute)

Since only 11% of 401k plan participants were in their sixties, we can conclude that most 401k participants are in a good position as they still have a lot of time to save for their retirement.

11. 43% of 401k plan assets were invested in equity funds.

(Investment Company Institute)

According to 401k statistics, in addition to equity funds, 401k plan assets were invested in target date funds, non-target date balanced funds, bond funds, and other equities. In total, 67% of 401k plan assets were invested in equity securities.

12. The average company contribution was 4.8% of payroll in 2016.

(PSCA)

We can notice an increase in the employer’s contribution since the average company contribution in 2007 was 3.8% of participants’ pay.

401k Stats

13. 58% of 401k participants see themselves as savers.

(Schwab)

It’s interesting that the remaining 42% of 401k plan participants think of themselves as investors as they invest in their future.

14. 77% of 401k participants are very or extremely confident in their ability to make the right investment decision with the help of a financial professional.

(Schwab)

401k plan statistics indicate that without a financial professional, 50% of 401k plan participants are confident in their ability to make the right investment decisions.

15. 64% of 401k plan participants check their accounts at least once a pay period.

(Betterment)

This stat shows that plan participants care about their plans and retirement preparations.

16. 41.2 million households in the US have people owning a 401k plan.

(Statista)

Unfortunately, 35% of private-sector workers aged 22 and older don’t have access to employer-sponsored retirement plans. (Pew)

17. The 401k plan had assets worth 5.3 trillion dollars in 2017.

(Statista)

According to these 401k facts from 2017, the 401k plan was the largest defined contribution retirement plan in the US.

18. Only 1 in 4 Baby Boomers believe that their savings will last throughout retirement.

(Insured Retirement Institute)

Four years ago, one in three Baby Boomers were confident that they would have enough money throughout retirement.

401k Stats

19. 38% of Baby Boomers plan to withdraw funds for basic expenses when needed.

(Insured Retirement Institute)

According to 401k statistics by age, only 14% of Baby Boomers plan to transfer a portion of their funds to lifetime income annuity, thus reducing the risk of running out of money in retirement.

20. Almost 4 in 10 Millennials consider 401k retirement savings extremely important when looking for a job.

(Pentegra)

Surprisingly, almost 40% of Millennial job seekers find this benefit more important than health insurance and pension plans.

21. About 70% of employers offered Roth features within 401k plans in 2017.

(GlobeNewswire)

According to a survey conducted by Willis Towers Watson in 2017, this is one of the improvements that employers made to their defined contribution plans.

22. 80% of workers who are offered a 401k or similar plan decided to participate in one.

(Transamerica Center for Retirement Studies)

401 k participation statistics show that the participation rate of workers from micro and large companies (83% and 80% respectively) is higher than the one of people working in small non-micro companies (73%).

23. 37% of workers expect to primarily rely on 401k, 403b, and/or IRA plans in retirement.

(Transamerica Center for Retirement Studies)

Only 26% of workers believe that social security will be their major source of income when they retire.

24. 13% of plan participants have made an early withdrawal.

(Transamerica Center for Retirement Studies)

These 401k withdrawal facts include people who participate in 401k or similar plan or IRA. Early withdrawals, as well as loans from retirement plans, can considerably reduce your retirement nest egg.

401k Stats

25. 41% of large companies offer automatic enrollment.

(Transamerica Center for Retirement Studies)

Automatic enrollment enables employees to start contributing to the plan automatically. Therefore, they don’t have to take any steps unless they want to opt out.

26. 78% of employers offer professionally managed account services or asset allocation suites for investments.

(Transamerica Center for Retirement Studies)

These professionally managed services are great 401k investments options for plan participants as they are tailored to their needs.

27. 83% of workers participating in a 401k or similar plan find online tools and calculators helpful

(Transamerica Center for Retirement Studies)

Many retirement plan providers offer online tools and calculators that enable their participants to project retirement savings and income needs. Furthermore, retirement plan participants also find many other resources helpful, such as quarterly statements, professional financial advice, and mobile apps.

28. About 28% of employers offer a 401k or similar plan to their part-time workers.

(Transamerica Center for Retirement Studies)

Some of the reasons why employers don’t offer these retirement plans to part-time employees include concerns about 401k cost and high turnover among part-time workers.

29. 73% of companies offer a matching contribution as part of a 401k or similar plan.

(Transamerica Center for Retirement Studies)

The employer’s matching contribution is a great way to motivate workers to save for retirement. According to national 401k statistics, the typical 401k match amounts to 3.5%.

30. 47% of companies not offering a 401k or similar plan state that they are not at all likely to start offering a plan in the next two years.

(Transamerica Center for Retirement Studies)

One of the reasons why they are not offering a 401k or similar plan is cost. Some employers believe that their company is not large enough, while others say that their employees are not interested.

401k Stats

FAQ

When can you take money out of your 401k?

Although this is generally not a good idea, you are allowed to take your money out of your 401k plan before you retire. In 2016, 23% of workers participating in a 401k or similar plan took a loan or early withdrawal from their retirement plans. However, you should be aware that if you withdraw your funds before age 59½, there is a 10% penalty on the sum you withdraw. In addition, you will have to pay both federal and state income taxes. Under certain conditions, the penalty might be avoided, so it’s best to talk to your financial advisor prior to making the final decision.

What is the average 401k balance in 2018?

In the first quarter of 2018, the average 401k balance was $102,900. Moreover, we can notice that there has been an increase in the average 401k balance since in the first quarter of 2013, it was $81,200.

How much should you have in your 401k at 30?

According to Fidelity, you should save the equivalent of your starting salary by the age of 30. Knowing how much your peers have saved can help you get a picture of your financial situation. So the average 401k balance of people in their thirties was $42,700 in the second quarter of 2018.

How much should I have in my 401k at 40?

Fidelity, one of the largest financial services companies, recommends having three times your salary in savings by the age of 40. In order to see how you stand in terms of retirement savings, it may be useful to know that the average 401k balance of people in their forties was $103,500 in the second quarter of 2018.

How much should I contribute to my 401k?

Professionals from Vanguard, one of the largest investment companies, suggest that you should save from 12% to 15% of your pay. However, Fidelity indicates that the average 401k contribution rate was 8.5% in Q3 2017, which is considerably lower than the recommended one.

Conclusion

As you can see, 401k plans have increased in popularity as more and more Americans rely on this type of saving. We at MedAlertHelp did our best to collect all the relevant and interesting 401k stats regarding this topic and present them in a readable way. If you too decide to enroll or you already participate in this defined contribution plan, have in mind that you should learn about it as much as possible so that you can manage this financial tool in the most effective way. For more information regarding retirement by the numbers, take a look at our retirement statistics article.

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