Americans were prioritizing retirement savings in 2023 despite the challenging economic environment.
The average balance in 401(k) accounts last year increased 15% year-over-year, to $86,280, as participants contributed more and saw the value of their investments increase.
In the fourth quarter of 2023, 18% of plan participants boosted their contributions, double the share who did so in the previous quarter (9%) although the average contribution amount was down slightly at $1,310 (from $1,430). There was a slightly higher share of participants who decreased their contributions (3.1%) than in the third quarter (2.2%) while 2% with automatic enrollment opted out.
Fewer withdrawals were recorded among the 4 million participants included in the analysis, which was conducted in partnership with Bank of America Institute. The share of participants who borrowed from their 401(k) account was 2.3% in the fourth quarter, down from 2.5% in the third quarter, with the average amount slightly lower, too, at $8,210 (from $8,530).
Just 0.57% of participants took hardship withdrawals during the fourth quarter, down slightly from the previous quarter, with an average amount of $4,370, the lowest quarterly average of 2023.
Health saving -ccounts also saw increased balances, rising 11% at year-end compared to a year earlier to $4,380, with more than four in ten adding more than they took out. More than three quarters of HSA contributions were spent on health care expenses, while 24% were saved.
Millennials saved 34% of their HSA contributions, more than any other generation, and men invested 17% of their contributions for future growth, compared to 11% of women.
“We were encouraged to see more plan participants taking positive actions in
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