Sixty-one percent of 401(k) participants’ assets were invested in equity securities and 34% in fixed-income securities in 2011, on average, according to the annual update of a joint study released today by the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI).
The study, 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2011, also finds that target-date funds play an increasingly important role in portfolio diversification, with 72% of 401(k) plans offering TDFs in their investment lineup at year-end 2011, up from 57% at year-end 2006.
At year-end 2011, 13% of the assets in the EBRI/ICI 401(k) database was invested in TDFs, up from 11% in 2010 and 5% in 2006. In addition, 39% of 401(k) participants held target-date funds at year-end 2011, compared with 36% in 2010 and 19% in 2006.
The study finds that more new or recent hires invested their 401(k) assets in balanced funds, including TDFs. For example, 51% of the account balances of recently hired participants in their 20s was invested in balanced funds at year-end 2011, up from 44% in 2010 and 24% in 2006. At year-end 2011, 40% of the account balances of recently hired participants in their 20s was invested in TDFs compared with 35% in 2010 and 16% in 2006.
The study shows at year-end 2011 that 21% of all 401(k) participants who were eligible for loans had loans outstanding against their 401(k) accounts, unchanged from the prior two years. Loans outstanding amounted to 14% of the remaining 401(k) account balance, on average, at year-end 2011, unchanged from year-end 2010, though loan amounts outstanding increased slightly from those at year-end 2010.
Age, tenure, and a number of other factors affect an individual’s account balance at any point in time. Among 401(k) participants in their 50s or 60s, the average account balance of the longest-tenured participants was more than eight times larger than that of those who are new to their jobs.
At year-end 2011, the average 401(k) participant account balance was $58,991 and the median (mid-point) account balance was $16,649, with the wide variation reflecting differences in participant age, tenure, salary, contribution behavior, rollovers from other plans, asset allocation, withdrawals, loan activity, and employer contribution rates.
The 2011 EBRI/ICI database includes statistical information on about 24 million 401(k) plan participants, in 64,141 plans, holding $1.415 trillion in assets, covering nearly half of the universe of 401(k) participants.
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