“How’s your 401k doing?”
It’s a question routinely asked by the president as an everyman proxy for overall economic health, and with major market indexes poised to hit new highs, the answer would seem to be “pretty good.”
New research from the Investment Company Institute shows well-behaved 401k participants taking advantage of the gains to be had.
ICI’s “Defined Contribution Plan Participants’ Activities, First Half 2019” found that Americans continued to save for retirement through defined contribution (DC) plans over the first half of this year.
The latest recordkeeper data indicate that plan participants remain committed to saving and investing, and only 1.3 percent of DC plan participants stopped contributing to their plans in the first half of 2019.
Other findings include:
Most DC plan participants stayed the course
In the first half of 2019, 6.1 percent of DC plan participants changed the asset allocation of their account balances, and 3.6 percent changed the asset allocation of their contributions. These levels of activity were slightly lower than the activity observed in the same time frame a year earlier.
Withdrawal activity for DC plans remained low
In the first half of 2019, 2.5 percent of plan participants took withdrawals, compared with 2.2 percent in the first half of 2018.
Levels of hardship withdrawal activity also were low, with only 1.1 percent of DC plan participants taking hardship withdrawals during the first half of 2019, compared with 0.9 percent in the first half of 2018.
DC plan participants’ loan activity edged up
Following a seasonal pattern observed over the past several years, 16.3 percent of plan participants had loans outstanding at the end of June 2019, compared with 15.9 percent at the end of March 2019 and 16.7 percent at year-end 2018.
ICI has been tracking DC plan participant activity through recordkeeper surveys since 2008.
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.
