Americans are doing it right, and continued to save for retirement through 401k and similar defined contribution plans early this year.
ICI reports that the latest recordkeeper data indicate that plan participants remain committed to saving and investing, as nearly all continued contributing to their plans in the first quarter of 2018.
Only 1.1 percent of DC plan participants stopped contributing during this period.
Allocations
Additionally, most DC plan participants stayed the course in their asset allocations. In the first quarter of 2018, 5.1 percent of DC plan participants changed the asset allocation of their account balances, and 3.5 percent changed the asset allocation of their contributions.
These levels of activity were similar to the activity observed in the same time frame in recent years.
Withdrawals
Withdrawal activity for DC plans remained low in the first quarter of 2018 and was similar to the first quarter in the prior year.
In the first quarter of 2018, 1.3 percent of DC plan participants took withdrawals, the same share as in the first quarter of 2017. Levels of hardship withdrawal activity also were low, with only 0.5 percent of DC plan participants taking hardship withdrawals during the first quarter of 2018, about the same share as in the first quarter of 2017.
Loans
DC plan participants’ loan activity edged down in the first quarter of 2018, following a seasonal pattern observed over the past several years.
At the end of March 2018, 16.4 percent of DC plan participants had loans outstanding, compared with 16.7 percent at the end of 2017.
ICI has been tracking DC plan participant activity through recordkeeper surveys since 2008. This update provides results from ICI’s survey of a cross section of recordkeeping firms representing a broad range of DC plans.
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.
