T. ROWE PRICE: 401(K) LOAN SIZES OUTPACED INFLATION IN 2024, HIGHLIGHTING THE IMPORTANCE OF EMERGENCY SAVINGS AND FINANCIAL WELLNESS FOR RETIREMENT SAVERS

New report features latest trends in 401(k) plan design and participant behavior, based on the firm's recordkeeping client data for 2024

BALTIMORE, April 16, 2025 /PRNewswire/ -- T. Rowe Price, a global investment management firm and leader in retirement today published its annual benchmarking report on 401(k) plan design and participant behavior, and found the average loan size grew by 4%, slightly higher than inflation in 2024. Participants across all age groups saw increases in average loan size, including those closer to retirement age, suggesting that financial wellness challenges are not felt solely by younger age groups. Loan usage also saw an uptick, increasing by two points since 2023, but remains below the 2015 to 2019 highs.

Meanwhile, data from a financial wellness questionnaire, hosted by T. Rowe Price for its 401(k) participants, found that 64% of respondents are unable to cover six months' worth of expenses. Those who said they did not have six months of emergency savings were also two times more likely to have taken a loan.

"With rising inflation, market volatility, and ongoing economic shifts, the importance of emergency savings funds and financial wellness programs becomes even more clear," said Francisco Negrón, head of Retirement Plan Services at T. Rowe Price. "Plan sponsors play a critical role, especially under these circumstances, and can have a direct impact on the financial security of their employees."

Additional key findings include:

• Participants who engage with financial wellness resources and retirement income tools, like T. Rowe Price's Retirement Income Planner or Social Security Optimizer, tend to demonstrate stronger savings behavior.
• Participants invested solely in a target date product are 20 times less likely to make an exchange and even when they do, 84% of them exchange into another target date fund.
• Twenty-three percent of participants aged 63 and older are currently invested in different target years than the assumed retirement age of 65. As participants age, an increasing percent are invested in a fund with a target date year other than the assumed retirement age of 65, illustrating a potential need for more personalized target date solutions.
• Fifty-five percent of retirement age participants leave the plan within four years of termination and another roughly 20% leave in the following five years. Meanwhile, 50% of plan sponsors prefer their participants keep their defined contribution plan balances in-plan when they retire. More plan sponsors are starting to offer solutions to better accommodate retirees and have expressed interest in implementing retirement income solutions.

Negrón adds, "Our purpose in delivering this report is simple: to equip plan sponsors and financial consultants with the insights they need to improve the financial futures of their participants. Ultimately, T. Rowe Price is dedicated to helping every participant get on the path toward better retirement outcomes, because everyone deserves to feel confident about their financial future."

ABOUT T. ROWE PRICE

Founded in 1937, T. Rowe Price (NASDAQ – GS: TROW) helps individuals and institutions around the world achieve their long-term investment goals. As a large global asset management company known for investment excellence, retirement leadership, and independent proprietary research, the firm is built on a culture of integrity that puts client interests first. Clients rely on the award-winning firm for its retirement expertise and active management of equity, fixed income, alternatives, and multi-asset investment capabilities. T. Rowe Price serves millions of clients globally and manages US $1.57 trillion in assets under management as of March 31, 2025. About two-thirds of the assets under management are retirement-related. News and other updates can be found on Facebook, Instagram, LinkedIn, X, YouTube, and troweprice.com/newsroom.

SOURCE T. Rowe Price Group