BofA Report Finds Average 401(k) Balances Up Nearly 10% in 2023; More Participants Taking Hardship Withdrawals
- Average 401(k) balances increased by $7,250 (9.6%) since the end of 2022.
- The number of participants taking hardship distributions increased by 36% year-over-year.
- The percent of participants borrowing from their workplace plan in Q2 increased to 2.5% from 1.9% in Q1.
- Health Savings Account balances increased by 11.9% since year-end 2022.
- None.
Newly Expanded Participant Pulse Report Also Finds Health Savings Account Balances Up Nearly
The Pulse monitors plan participants' behavior in Bank of America recordkeeping clients' employee benefits programs, which is comprised of more than 4 million participants as of June 30, 2023.
"The data from our report tells two stories – one of balance growth, optimism from younger employees and maintaining contributions, contrasted with a trend of increased plan withdrawals," said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions at Bank of America. "This year, more employees are understandably prioritizing short-term expenses over long-term saving. However, it's critical that employees continue to invest in life's biggest expense – retirement."
Amid rising 401(k) plan withdrawals, employee contributions remained steady, with the average rate remaining at
Health Saving Account and Financial Wellness Trends
To provide a more holistic look at confidence around financial preparedness, Bank of America has expanded the quarterly Participant Pulse report series to examine engagement across Health Saving Accounts (HSA) and overall feelings of financial wellness, in addition to 401(k) trends. Key HSA and financial wellness findings include:
- HSA account balances increased by
11.9% over year-end 2022. Average HSA account balances increased from to$3,931 in the first six months of 2023.$4,397 - Many HSA account holders continue to save their contributions for future expenses. Nearly 4 in 10 account holders contributed more than they withdrew in Q2, consistent with year-end 2022.
- Baby Boomers invested their HSAs at higher rates than other generations. On average, only
12% of account holders invested their HSAs for future growth in Q2, with Baby Boomers leading at15% . In addition, more men invested than women (18% vs.11% ). - Feelings of financial wellness declined slightly. Out of a possible 100 points, the average financial wellness score for employees was 56, down one point from 57 at year-end, with women trailing men (52 vs. 59).
Read the full report and methodology to learn more.
1 Bank of America, "401(k) Participant Pulse," March 2023.
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SOURCE Bank of America Corporation
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