Cracks Starting to Show in 401(k) Plans
A recent story in The Wall Street Journal provides a sobering and objective assessment of the current state of retirement savings in the United States.
The average worker with a 401(k) account is facing drastic shortfalls in the amount of savings required to support retirement spending levels that are comparable to pre-retirement income levels.
The Journal story finds that the median household age 60-62 with a 401(k) account has less than one quarter of what is needed in the account to maintain their standard of living in retirement.
The data is based on 401(k) balances at the end of 2010 and salaries from 2009.
Retirement income needs are pegged to 85 percent of pre-retirement income. This median figure is $74,545 per year. The funding shortfall is due to the fact that the median 401(k) balance for the same set of households is only $149,400--much less than what is needed to support the annual spending figure even when combined with Social Security.
The article does an outstanding job of bringing to life the human element of these data sets.
Source: Wall Street Journal