Graphic: Private DC plan savers relying on equities

Non-governmental defined contributions plans have become increasingly important to participants' retirement, and stocks have dominated those investments. Nearly three-quarters of plan assets are invested in equities, according to Vanguard's latest How America Saves report. However, increased equity volatility has resulted in participants shifting from equity funds to fixed income as measured by daily transfers.
DC plan growth: DC assets outside of state/local and the federal governments have grown 163% to $9.95 trillion from the end of 2010 through March 2024. During that period, defined benefit assets increased 14% to $3.25 trillion.
Assets, private DB vs. DC (trillions)
DC allocations: There has been a marked increase in allocations to target-date funds, to 41% of assets last year vs. 23% in 2014. Cash, diversified equity funds and company stock fell over that time; however, total equity allocations still grew.
DC asset-weighted allocation
Asset class201420192023
Target-date funds23%37%41%
Diversified equity funds44%40%40%
Cash11%7%6%
Bond funds7%7%6%
Other balanced funds7%5%4%
Company stock8%3%2%
Brokerage0%1%1%
Total equity72%73%74%
Younger workers ❤ TDFs: Younger workers have a greater allocation to target-date funds. Among those under 25, they made up 79% of allocations, and 25% for those 65 and older. The median equity allocation was 88% for those under 25 and 47% for individuals at least 65 years old.
DC asset allocation by age group
Volatility effects: As equity volatility increases, participants tend to move money from equity to fixed income, according to the Alight Solutions 401(k) index. During the first two months of Q3, there were 33 fixed-income days and 11 equity days as the Cboe VIX climbed to an average of 17.2, from 14 the previous quarter.
Alight 401(k) index and equity volatility
Sources: Federal Reserve, Vanguard Group, Alight Solutions, Cboe Global Markets