6 Striking Trends from New 401k Report

Released July 13, Bank of America’s new 2022 Financial Life Benefits Impact Report examines trends in employee usage and engagement with workplace benefit programs, with a strong emphasis on 401k plans.

“Using our participant data, we’ve identified a number of trends that we are using to inform how we develop new innovative ways to serve our clients and their employees. These insights can also help employers make more informed decisions to support their employees in pursuing their own financial success—while helping their businesses thrive,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions Bank of America. “Although employers are broadening financial wellness programs with more services, significant work is still needed to increase employee utilization of these benefits.”

The 11-page report is filled with details about 401k participation and deferral rates, account balances, financial wellness program utilization, and investing behavior. What follows are six key takeaways.

Millennials not leveraging the full potential of a 401k

Among 401k plans recordkept by Bank of America, 58% of all eligible employees participate, including 62% of men and 55% of women.

Millennials are the least likely to participate in a 401k plan (54% vs. 65% of Gen X and 59% of Baby Boomers), and 70% of Millennials contribute less than $5,000 annually. That is significantly higher than Gen X (54%) and Boomers (51%).

In addition, only 4% of Millennials are contributing the allowable maximum ($20,500 in 2022), compared to 12% of Gen X and 14% of Boomers. Less than one in 10 401k participants overall contribute at the allowable limit.

• SEE ALSO: How Consistent 401k Participation Pays—Big: Study

NEXT PAGE: Gen Z women outinvesting Gen Z men