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36 Important 401k Statistics for Companies and Employees in 2021

Important 401k Statistics for Companies and Employees

To save money for retirement, Americans must plan and choose the best investment option for them. Most people invest in defined contribution plans, such as 401k, but it is not always clear if their plan is healthy. Here are some statistics to help and give you a benchmark of your 401k performance.

EMPLOYEE INVESTMENT MINDSET

  • Two-thirds of participants (64%) in 401k plans view themselves as savers, not investors (Schwab, 2019) 
  • 64% of participants check their accounts at least once every pay period (Betterment, 2018) 
  • Concern and retirement readiness are the main motivator for most of the participants (75%) (Betterment, 2020)  
  • 77% of participants are extremely confident in their ability to make the right financial decisions with the help of a financial advisor (Careerbuilder, 2017) 
  • 97% of plans now use personalized communication to participants, 93% of plans offer webinars and 90% offer mobile websites or apps (Alight, 2018) 
  • Almost one in three workers have made an early withdrawal from their retirement funds (TransamericaCenter, 2019)  
  • The number of sponsors that are actively looking to switch advisors has significantly dropped at only 18% (NAPA, 2019)  
  • 92% of American workers with 401k plans have reported that having a pay-roll deduction helps them save (AmericanBenefitsCouncil, 2019) 

401K FEES AND RATES

  • While fees and expenses vary for each plan the average expense ratio range is from 0.3% to 2% (Investopedia, 2019) 
  • The average all-in fee is 2.22%, but it can range from 0.2% to 5% (Smartasset, 2019) 
  • 85% of participants feel that it is especially important their plans have transparent and low-cost fees (Betterment, 2020) 
  • 7.1% is the average deferral rate (401kspecialistmag) 
  • The compound annual average growth rate of 401k plans is 14.2%  (U.S. News, 2019)   
  • The total savings 401k contribution rate and the employer’s 401k match for 2018 was 13.2% (Fidelity, 2018) 

401K ASSETS

  • The number of millionaires is increasing, 157,000 people had at least $1 million in their 401k account at the end of Q1 2018 (Fidelity, 2018) 
  • 401k is the most popular method for saving money for retirement (98%), with the second option being saving in a savings account (61%) (Schwab, 2018) 
  • The largest source of income in retirement for 62% of participants will be their 401k (Schwab, 2018) 
  • Government bonds on average give a 5.5% return annually, large-cap stocks returned 10.2% compounded annually, while small-cap stocks returned 12.1% (Morningstar, 2018) 
  • U.S. retirement assets (29.2 trillion) now account for one-third of all household financial assets (ThinkAdvisor, 2018) 

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401K PARTICIPATION

  • More than 4 in 5 employees (84.9%) participate in their 401k plans (PIonline2018) 
  •  More than 90% of employees are eligible to apply for their employer’s defined contribution plan (AmericanBenefitsCouncil, 2019) 
  • According to Vanguard, 97% of their participants belong to target-date funds (TDFs), and 52% are invested in a single target-date fund (Vanguard, 2019) 
  • 51% of private industry workers have access to defined contribution retirement plans (Bureau of Labor Statistics, 2018) 
  • Only about 45% of part-time workers are offered a 401k or similar savings plan (TransamericaCenter, 2019) 
  • 40% of employers who do not offer auto-enrollment have said that they do not plan to change (TransamericaCenter, 2019) 
  • 77% of those participating have opted for the automatically-adjusted funds option (Vanguard, 2019)  
  • 85% of plans now offer the Roth 401k plan which is a combination of Roth IRA and 401k (Callan, 2019) 

GENERATIONAL DIFFERENCES IN SAVINGS AND 401KS

  • Only about 25% of Baby Boomers believe their savings will be enough to last them for retirement (IRI, 2018) 
  • Despite low salaries and high debt loads, millennials have a surprisingly high participation rate in 401k plans (82%) (AmericanBenefitsCouncil, 2019) 
  • Monthly guaranteed income is the most important trait that Boomers are looking for in a retirement investment (IRI, 2018) 
  • About 70% of Boomers have said that having a saving account that is guaranteed for life is particularly important to them (IRI, 2018) 
  • One in four millennials reported that out of the general benefits category having a 401k plan ranks as extremely important (Pentegra, 2018) 

401K BALANCES AND CONTRIBUTIONS

  • The average annual employee 401(k) contribution was $6,940 (MarketWatch, 2019) 
  • The average annual employer 401(k) contribution was $4,040 (Nerdwallet, 2019) 
  • The average number of investment options is 10 (MarketWatch, 2019) 
  • The average 401k balance is $103,700, while the median is just $24,500 (Nerdwallet, 2020)

The popularity of the 401k plan is undoubtedly on the rise. Choosing the right plan for your future is more important now than ever, and the statistics shown above should help and give you a clearer image of what your ideal 401k plan should look like.