Why Rising 401(k) Balances May Not Be Enough
But is it enough?
Although the increase in 401(k) contributions is good news, it begs the question of whether it makes much difference to the state of retirement savings. The Fidelity analysis does not indicate the average age of account holders, but a balance of $75,000 is well below what financial advisers typically recommend for people nearing retirement.
With the future solvency of Social Security remaining a question mark, today's younger workers may be well advised to carefully
calculate their financial needs for retirement. Unfortunately, for many middle-income workers, saving more appears to either not be a priority or a possibility.
study from LIMRA, a research and consulting firm in the financial services industry, found 65 percent of workers earning between $40,000 and $99,999 annually are saving less than 5 percent of their income for retirement. In addition, 22 percent say they are saving nothing.
"These results, while not surprising, are very troubling," said Matthew Drinkwater, associate managing director of LIMRA's retirement research, in a written statement. "Less than 30 percent of American workers have a traditional defined benefit retirement plan that could help them pay for their expenses in retirement, so the responsibility for providing the financial resources for retirement lies squarely on the individual."
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