Trump bump, good investing behavior or better 401k technology/product innovation? Whatever the reason (or possibly all three), Americans continued to save and contribute to their retirement plans in early 2017.
Inauguration chaos apparently did little to dampen 401k saving enthusiasm, with only 1.1 percent of defined-contribution plan participants not contributing during this period, according to the Investment Company Institute.
ICI’s study tracks contributions, withdrawals, and other activity, based on DC plan recordkeeper data covering more than 30 million participant accounts in employer-based DC plans.
- Most DC plan participants ‘stayed the course’ in their asset allocations.In the first quarter of 2017, 4.6 percent of DC plan participants changed the asset allocation of their account balances, and 3.8 percent changed the asset allocation of their contributions. Account balance reallocation activity was little changed, and contribution reallocation activity was in line with the activity observed in the same time frame in recent years.
- Withdrawal activity for DC plans remained low in the first quarter of 2017, and was in line with the first quarter in the year prior. In the first quarter of 2017, 1.3 percent of DC plan participants took withdrawals, about the same share as in the first quarter of 2016. Levels of hardship withdrawal activity also were low, with only 0.4 percent of DC plan participants taking hardship withdrawals during the first quarter of 2017, the same share as in the first quarter of 2016.
- DC plan participants’ loan activity edged down in the first quarter of 2017, following a seasonal pattern observed over the past several years. At the end of March 2017, 16.6 percent of DC plan participants had loans outstanding, compared with 17.0 percent at the end of 2016. Loan activity continues to remain slightly higher than eight years ago (at the end of 2008, 15.3 percent of DC plan participants had loans outstanding).
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
