While we tend to remember October’s tumbles, it’s September that tends to be the problem for U.S. stock markets. What happened to the average 401(k) this time?
Sure enough, despite a long stretch of gains for the stock market this year, September turned out to be a bit of a downer; the S&P 500 tumbled 4.8% in September (its largest monthly decline since March 2020, according to the Wall Street Journal), while the Dow Jones Industrial Average dipped 4.3% and the NASDAQ dropped 5.3%. That said, the S&P 500 managed to eke out a 0.2% gain in Q3—its sixth consecutive quarter of gains, though the Dow and NASDAQ marked their first quarterly losses since Q1 2020.
As for the average 401(k), that of older (age 55-64) workers with more than 20 years of tenure closed off 3.2% in September, while that of younger (25-34), less tenured (1-4 years) workers slipped 2.4%, according to estimates from the nonpartisan Employee Benefit Research Institute (EBRI). Bear in mind that the older cohort’s shift (they have larger balances) is generally more influenced by market moves than by contributions.
However, year to date, the average 401(k) of the older, more tenured cohort is (still) ahead 11.8%, while the younger group is now 21.2% higher than it began the year.
As for quarter-to-date results, the average 401(k) balance of the younger, less-tenured cohort saw an increase of 4.2%, the older, more-tenured cohort was 1.3% higher.