401(k) Balances Still Below 2007 Peaks

Consistent retirement savers are recovering the fastest.

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The typical 401(k) account now holds a considerably higher balance than it did in 2008. But many 401(k) balances still have not surpassed their 2007 peaks.

The median 401(k) account held $59,381 at the end of 2009, up from $46,338 in 2008, according to an Employee Benefit Research Institute and Investment Company Institute analysis of 4.3 million consistent 401(k) participants between 2003 and 2009. But that’s still slightly less than the $60,858 the median retirement saver had in 2007.

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Young retirement savers with fewer years on the job experienced the largest increases in account balances between 2003 and 2009. The value of 401(k) accounts held by investors in their 20s rose 587 percent over the 6-year period because initial account balances were small and new contributions produced significant growth. Older participants with longer job tenures showed more modest nest egg growth. The average account balance among 401(k) participants in their 60s increased 44 percent during the same time period, mostly due to investment returns on higher initial balances.

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However, retirement savers who consistently participate in the same 401(k) plan are far from the norm. Just 4.3 million of the 20.7 million 401(k) participants studied maintained the same 401(k) plan between 2003 and 2009. Most 401(k) account owners changed or lost their jobs or otherwise jumped in and out of the retirement system during the 6-year time period and have far lower account balances as a result. The consistent savers achieved a median 401(k) account balance of $59,381 at the end of 2009, nearly three and a half times more than the $17,794 median account balance of all 401(k) participants last year.

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Most retirement savers have either very large or very small retirement account balances. Over half (52 percent) of 401(k) participants have less than $20,000 in their account, while 17 percent have more than $100,000 saved for retirement.