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Staying power

To accurately assess the impact of participation in 401(k) plans over time, it is important to analyze a group of consistent participants what statisticians call a longitudinal sample.

By Nevin Adams | Updated on November 01, 2013

I’ve noted before the shortcomings of metrics such as an “average” 401(k) balance, which generally aggregate the balances of participants in widely different circumstances of age and tenure everything from those just entering the workforce who have relatively negligible 401(k) balances with those who may have been saving for decades. 

While these averages can, over time, provide a sense of the general direction in which things are moving, they’re not generally a very accurate barometer when it comes to assessing actual retirement accumulations. That’s one reason why the annual updates of the EBRI/ICI 401(k) database also report average balances by age and tenure.

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