By Pension and Benefits Editorial Staff
Despite what was a challenging year financially for many Americans, the vast majority of current retirement plan participants remained committed to saving for retirement, according to recent research from the Bank of America. The 2021 Financial Life Benefits Impact Report found that last year, nearly 60 percent of employees participated in their workplace retirement plan, which is consistent with pre-pandemic participation rates in 2019. Among employers who use the automatic enrollment feature within their 401(k) plan, plan participation jumped to 86 percent, the report found.
Bank of America noted that employees consistently rank retirement as the benefit they value most out of their total benefits package. Average 401(k) account balances increased from $74,000 in 2019 to $81,000 in 2020. However, men outpace women with an average balance of $98,000, compared to $62,000 for women, according to the study.
Despite challenges for many, only 10 percent of 401(k) plan participants took a hardship distribution withdrawal made possible by the CARES Act, at an average amount of less than $18,000 per participant. CARES Act distributions outpaced standard hardship distributions 10-to-1, and just 17 percent of participants took a loan against their retirement plan assets, consistent with 2019 rates.
The survey also found the following:
- Women continue to trail men across financial wellness metrics, with a financial wellness score nine points lower than their male counterparts.
- Employees are seeing an expanded choice of investments, with retirement plans offering target-date funds increasing 17 percent and those offering sustainable investment options growing by 9 percent.
- Employees are taking control of health care expenses, increasing their health savings account (HSA) balances by 17 percent and investing these savings to help cover future health care expenses.
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