What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Plan Account Balances, 2016–2020

This paper provides an update of a longitudinal analysis of 401(k) plan participants drawn from the EBRI/ICI 401(k) database. Because the annual cross sections cover participants with a wide range of participation experience in 401(k) plans, meaningful analysis of the potential for 401(k) participants to accumulate retirement assets must examine the 401(k) plan accounts of participants who maintained accounts over all of the years being studied (consistent participants). For example, because of changing samples of providers, plans, and participants, changes in account balances for the entire database are not a reliable measure of how individual participants have fared. A consistent sample is necessary to accurately gauge changes, such as growth in account balances, experienced by individual 401(k) plan participants over time.A few key insights emerge from looking at the 3.7 million consistent participants in the EBRI/ICI 401(k) database over the four-year period from year-end 2016 to year-end 2020. The average 401(k) plan account balance for consistent participants rose each year from year-end 2016 through year-end 2020. Overall, the average account balance increased at a compound annual average growth rate of 19.4 percent from 2016 to 2020, rising from $78,008 to $158,361 at year-end 2020. The median 401(k) plan account balance for consistent participants increased at a compound annual average growth rate of 28.3 percent over the period, to $62,134 at year-end 2020. Younger 401(k) participants or those with smaller year-end 2016 balances experienced higher percent growth in account balances compared with older participants or those with larger year-end 2016 balances