The behaved well and did exactly what they should. How boring.
401(k) participants stayed the course during the first half of this year, according to the Investment Company Institute’s latest study of retirement plan savers, despite Brexit, a contentious election primary season and ongoing turmoil overseas.
The study, “Defined Contribution Plan Participants’ Activities, First Half 2016,” tracks contributions, withdrawals, and other activity through the first six months of 2016, based on DC plan record keeper data covering about 28 million participant accounts in employer-based DC plans.
“DC plans are an important component of Americans’ retirement saving; assets in all DC plans accounted for about one-tenth of US households’ aggregate financial assets at the end of June 2016,” ICI notes.
The latest record keeper data indicate that savers remain committed to 401(k) plans, finding that nearly all plan participants continued contributing to their plans during the first half of 2016. Indeed, only 1.8 percent of DC plan participants stopped contributing in the first half of 2016, the same share as in 2015.
Other findings include:
- Withdrawal activity for 401(k) DC plans remained low in the first half of 2016, as in the first six months of 2015. Levels of hardship withdrawal activity also were low, with 0.8 percent of DC plan participants taking hardship withdrawals during the first half of 2016, compared with 0.9 percent in the first half of 2015.
- Most DC plan participants stayed the course in their asset allocations, as stock values edged up during the first six months of the year. In the first half of 2016, 6.5 percent of DC plan participants changed the asset allocation of their account balances, and 5.5 percent changed the asset allocation of their contributions. Account balance reallocation activity was little changed and contribution reallocation activity was slightly lower compared with the same time frame a year earlier.
- DC plan participants’ loan activity was little changed at the end of June 2016. At the end of June 2016, 17.1 percent of DC plan participants had loans outstanding, compared with 17 at the end of March 2016. The first quarter of the year tends to have lower percentages of DC plan participants with loans outstanding compared with later quarters.
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.
