New Quarterly Report on the Behaviors of Three Million 401(k) Plan Participants Finds Millennials Lead the Way in Contribution Rates
CHARLOTTE, N.C., Feb. 8, 2023 /PRNewswire/ — Bank of America today launched the 401(k) Participant Pulse, a new quarterly report series providing timely insights into plan participants’ confidence and sentiment toward retirement planning and overall financial wellness.
Drawing on data from the company’s proprietary financial benefits programs, which include more than 3 million 401(k) plan participants, the new report analyzes activity across 401(k) loans, hardship distributions and overall contribution rates, and aims to help gauge the extent to which short-term economic trends may be impacting consumers’ long-term financial planning.
“We are deeply committed to understanding how current financial realities are affecting consumers’ long-term financial health and planning,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions at Bank of America. “Long-term retirement planning is a critical metric when considering an individual’s financial wellbeing, as well as the economy as a whole.”
The inaugural 401(k) Participant Pulse reveals:
- Contribution rates down slightly in 2022. The average plan participant contribution rate dropped slightly from 6.6% at the end of 2021 to 6.4% at the end of 2022, suggesting consumers may have been a bit more focused on short-term financial needs last year.
- Fewer participants taking loans, but defaults rise slightly. In Q4 2022, 60,789 participants borrowed from their workplace plan, which was a decline of 12% from Q3. Loan defaults rose slightly to 15.9%. The average loan amount in Q4 was $7,500, the lowest average for all four quarters in 2022.
- Fewer participants taking hardship withdrawals for immediate financial needs. Participants taking a hardship distribution declined in Q4 2022, with the average at 0.4% (down from 0.5% in Q3) and the number of participants totaling 12,350 (down 18% compared to Q3). In addition, the average hardship amount also declined in Q4 from Q3 by 8%.
- Millennials lead the way in savings rates. Almost half of Millennials (47%) contributed 7% or more to their plan – more than any other generation. Meanwhile, Baby Boomers had the highest percentage of participants (43%) contributing 3% or less.
- 30- and 40-year-olds drive borrowing. More than half of loans taken in 2022 were participants ages 30-49. Gen X (age 43-58) had more participants (3.1%) with loans in default at year end than any other generation.
Bank of America’s Retirement & Personal Wealth Solutions organization serves more than 25,000 companies of all sizes and more than six million employees as of December 31, 20221. Bank of America offers institutional client employees a range of financial benefit programs and solutions to help them pursue their financial future.
Financial Wellness at Bank of America
At Bank of America, we know that supporting the physical, financial and emotional wellbeing of our employees in their personal life also supports them in their work life — so they can be the best at work and at home. When it comes to financial wellness, we believe that the more informed people are about their money, the clearer their financial outlook can be. This applies not just to our clients, but to our employees, as well. This is why we offer robust financial offerings to our employees that focus on driving better behaviors across life priorities and the financial spectrum — budgeting, planning, saving, investing and more. Our competitive financial benefits – including 401(k) plans that include a company match, retirement advice2, health savings accounts3, banking4 and investing5 programs, educational resources and financial wellness tools – help employees address money issues in the here-and-now, prepare for retirement and help protect their family over the long term.
1Source: Global Wealth and Investment Management Finance.
2Investment advice on 401(k) assets is only provided to plan participants through certain investment advisory programs as directed by plan sponsors.
3Made available through Bank of America, N.A.
4Bank products are available from Bank of America, N.A., and affiliated banks.
5Investment products are available from Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Bank of America
Bank of America is one of the world’s leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 67 million consumer and small business clients with approximately 3,900 retail financial centers, approximately 16,000 ATM and award-winning digital banking with approximately 56 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and approximately 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
For more Bank of America news, including dividend announcements and other important information, visit Bank of America newsroom and register for news email alerts.
Retirement and Personal Wealth Solutions is the institutional retirement business of Bank of America Corporation (“BofA Corp.”) operating under the name “Bank of America.” Investment advisory and brokerage services are provided by wholly owned non-bank affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”), a dually registered broker-dealer and investment adviser and Member SIPC. Banking activities may be performed by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A., Member FDIC.
Are Not FDIC Insured
Are Not Bank Guaranteed
May Lose Value
© 2023 Bank of America Corporation. All rights reserved.
Reporters may contact:
Don Vecchiarello, Bank of America
SOURCE Bank of America Corporation