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Retirement Planning > Retirement Investing

Vanguard reports record 401(k) balances

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Vanguard reports that the average nominal account balances for 401(k) plan participants reached a record high of $101,650 at year-end 2013, 18 percent higher than the previous year and the highest recorded since Vanguard began tracking the figure in 1999.

Vanguard released preliminary data showing several key 2013 trends in its 401(k) and other defined contribution retirement plans. The figures, which are drawn from the company’s recordkeeping data, show:

  • More companies are automatically enrolling employees into their plans. In an increase fueled mostly by larger plans (those with 1,000 or more participants), 34 percent of Vanguard plans, including 60 percent of larger plans, have taken this step to help their employees save for retirement. This is up from 24 percent five years ago.
  • The use of professionally managed investment options within 401(k) plans continues to rise. Forty percent of Vanguard participants now use one of these options, which include target-date funds, other balanced funds, and a managed account program.
  • More than half (52 percent) of Vanguard plans are offering the Roth 401(k) feature, which enables participants to contribute after-tax income to their plan account. Because large plans were early adopters of this feature, this growth is coming primarily from smaller plans (those with fewer than 1,000 participants).
  • More participants appear to be actively engaged in their retirement plans. In 2013, 60 percent of participants proactively contacted Vanguard via phone or the Web about their plan account, compared with 53 percent 10 years ago.
  • Despite continuing economic uncertainties, participants aren’t accessing the money in their accounts through loans or withdrawals any more than they have in the last several years. The number of Vanguard participants who have an outstanding loan or who took a withdrawal remained steady at 18 percent and 4 percent, respectively.
  • Of the participants who left their company’s employment, an increasing number — 85 percent compared to 82 percent five years ago — kept their money in their plan accounts, thus preserving those assets for retirement.

“While there is more to be done to help Americans save more effectively for their retirement, these are positive trends that show we are clearly moving in the right direction,” said Jean Young, senior analyst at the Vanguard Center for Retirement Research and lead author of Vanguard’s How America Saves, an annual report widely considered a measure of 401(k) plan behavior.

Additional data and trends will be released in Vanguard’s “How America Saves 2014” report, scheduled to be issued in June.


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