Saving money piggy bank

Despite market downturn, plan participants stay the course

Finally, some good retirement news! Despite the increased market volatility and belt tightening caused by inflation, most 401(k) and 403(b) participants are sticking with their retirement plan. The Investment Company Institute surveyed recordkeepers representing over 40 million participant accounts. The results show[1] that participants are still contributing, haven’t increased withdrawals or loans, and haven’t changed their allocation.

Here are some highlights:

Most participants did not stop contributing. In the 2022 survey, only 1.6% of participants had stopped contributing to their plan. This is in line with results since 2010 but different from the 4.6% who stopped contributing in 2009, another time of financial stress.


Most participants did not change their asset allocation. In the recent survey, only 6.6% of participants had changed the asset allocation of their account balance and only 3.5% had changed the allocation of their contributions. Again, these results are consistent with results since 2010 but better than results from 2009 during which 7.7% changed their account allocation and 9.3% changed their contribution allocation.


Most participants did not take a withdrawal. Recent volatility and inflation is not causing large numbers of withdrawals with only 2.9% taking a withdrawal of any kind and only 1.6% taking a hardship withdrawal. These results are consistent with previous years, including 2009 when withdrawal activity did not increase.


The number of participants with plan loans decreased. The survey revealed that 12.5% of participants had an outstanding plan loan. This is a decrease from previous years where the percentage of outstanding loans ranged between 16-18%.


In a period of largely negative financial news, it is encouraging to read something good! Do participants see this as a good time to invest? Are they focused on long-term results? Do they realize that their retirement plan is their best shot at retirement readiness? Whatever the reason, it is encouraging that market volatility and the financial strain brought by inflation have not prevented the majority of plan participants from staying the course with their retirement savings.

If you’re a plan sponsor, give your employees a pat on the back for staying engaged with their retirement goals. If you are a business owner or ministry leader who doesn’t offer a plan, today is a great day to change that.

Survey results like these indicate that your employees will participate despite the volatile market. Other survey results show that a retirement plan is the second most valuable benefit to employees. There are advantages to your business too!

Don’t let bad market news stop you from making a good decision for your business and your employees, give us a call today to find out about our 401(k) and 403(b) plans!


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