Bank of America's review of data from over 4 million retirement plan participants revealed that while the average 401(k) balance grew over 10% in the third quarter, many retirees are still living paycheck-to-paycheck. The average balance rose to over $102,000 from $93,000 in June - coinciding with a 5.5% rise in the S&P 500. Still, almost 60% of the 400,000 participants who undertook a Bank of America financial wellness assessment reported feeling financial pressure, citing no surplus funds at the end of each month.
In the third quarter, the number of participants opting for 401(k) loans decreased from 2.7% in Q2 to 2.5% in Q3. Concurrently, the average loan amount dropped from $9,300 to $9,100. However, those taking hardship distributions saw a slight uptick, from 0.67% in Q2 to 0.72% in Q3.
The report further noted that most retirees maintained their savings habits, with a slight increase in the average contribution rate to the 401(k). Among the participant age groups, Gen Z and millennials demonstrated the greatest increases, although the overall average 401(k) contribution dipped slightly to $1,440 in Q3 from over $1,500 in Q2.