More than 70 percent of 401(k) investment lineups included target-date funds at the end of 2014, according to data from the Employee Benefits Research Institute and the Investment Company Institute.
The EBRI/ICI study can be accessed here.
All told, TDFs hold 18 percent of assets tracked in the EBRI/ICI database, and 48 percent of all participants hold some assets in TDFs.
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The majority of new hires are either opting to invest in TDFs, or are being defaulted into the option by sponsors, as 35 percent of all recently-hired participants assets were invested in TDFs.
In 2014, 60 percent of 401(k) participants in their 20s held target-date funds, compared with 41 percent of 401(k) participants in their 60s, according to EBRI and ICI.
For all participants, the average allocation to equities was 66 percent in 2014, either through equity mutual funds of the equity portion of balanced funds like TDFs, and company stock. Fixed-income securities accounted for 27 percent of all assets.
More participants held equities at the end of 2014 than did before the 2008 financial crisis. For millennials in their 20s, more than three-quarters had more than 80 percent of assets invested in equities, up from less half of participants in their 20s holding as much in 2007.
The average 401(k) account balance for the end of 2014 was $76,293, while the median balance was $18,127.
The average balance was up about $4,000 from 2013, and the highest on record (EBRI/ICI data ranges back to 1996.)
Still, the data shows that a substantial number of participants across the age spectrum have balances way below the average. For savers in their 40s, 22 percent have less than $10,000 saved in 401(k)s; 17 percent of participants in their 50s have less than that much; and 8 percent of participants in their 60s have less than $10,000 in their accounts.
For savers over 50, 40 percent only have between $40,000 and $50,000 saved, compared to the 60 percent that have more than $100,000 saved.
Tenure, or the time invested in a 401(k), seems to have a substantial impact on the wealth of account balances.
Of those participants with more than $100,000 saved, 73 percent had at least 10 years invested in a 401(k).
Not surprisingly, the impact of salary on account balances was striking. Longer tenured participants in their 60s who make less than $40,000 had a median balance of $61,012, while those earning more than $100,000 had a median balance of $382,531.
Smaller plans, as weighted by the number of participants, had the highest average account balances. Plans with 11 to 25 participants had the highest average, at $85,614, and plans with 10 or fewer participants had $84,373 in assets, on average.
The average unpaid 401(k) loan balance was up in 2014 to $7,780. The majority of participants in all age groups had no outstanding loans: 89 percent of participants in their 20s, 74 percent of participants in their 40s, and 87 percent of participants in their 60s had no loans outstanding at year-end 2014.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
