Few Participants Changed The Asset Allocation of Their Contributions Through Q3 2022

Most defined contribution participants stayed the course in saving for retirement in 2022, despite volatile market swings, rising interest rates and geopolitical unrest, Investment Company Institute data shows.

Through the first three quarters of 2022, 3.8% of defined contribution plan participants changed the asset allocation of their plan contributions, an especially revealing number when compared to 9.8% who changed back in Q3 2009, the ICI Survey of DC Plan Recordkeepers found.

Additionally, the survey found that 7.4% of participants changed the asset allocations of their account balances through the first three quarters of 2022, compared to 9.9% who did so in the same period of 2009.

ICI launched the survey following the financial crisis of 2007-08 to research participant behavior regarding retirement planning and savings, explains Sarah Holden, senior director of retirement and investor research at ICI.

“The key takeaways I saw are that retirement savers are remarkably resilient and really stay committed to the to the process,” she says. “[V]ery few people stop[ped] contributing, very few people took withdrawals and, for the most part, they stayed the course with their asset allocations, even as the stock market has been moving down and moving around.”

In the first three quarters of 2022, the S&P 500 total return index fell 4.6%, the survey summary of findings stated.

Data compares the retirement investment and savings behavior of plan participants during and after the Global Financial Crisis based on how many stopped contributing to a retirement plan, explains Holden.

“Only 2.1% of participants stopped making contributions in their [retirement] plan in the first three quarters of this year, so that the flip side of that means 98% of them kept going,” Holden says.

Through Q3 2021, 1.2% stopped contributing to a retirement plan, 2.2% through Q3 2021 and 1.9% through Q3 2019, compared to 5% of participants who stopped contributing by Q3 2009, ICI finds.

The data highlight that many participants are steadfast and disciplined in continuing to contribute to their retirement account from every paycheck, adds Holden.

“Paycheck by paycheck, contribution activity really helps them stay the course as either the market moves up and down or as something like a pandemic hits the United States,” Holden says.

Through Q3 2021, 5.2% of participants changed the asset allocation of their contributions, versus 5.6% through the same period of 2020 and 4.2% in 2019, ICI data shows.

ICI gathered data for the survey in the first nine months, January through September, from a cross-section of defined contribution plan recordkeepers, covering more than 40 million DC plan participants.