401(k) balances hit record $89,300 last year

[Moonbeam]

25 “Therefore I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more than food, and the body more than clothes? 26 Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them. Are you not much more valuable than they? 27 Can any one of you by worrying add a single hour to your life[e]?

28 “And why do you worry about clothes? See how the flowers of the field grow. They do not labor or spin. 29 Yet I tell you that not even Solomon in all his splendor was dressed like one of these. 30 If that is how God clothes the grass of the field, which is here today and tomorrow is thrown into the fire, will he not much more clothe you—you of little faith? 31 So do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ 32 For the pagans run after all these things, and your heavenly Father knows that you need them. 33 But seek first his kingdom and his righteousness, and all these things will be given to you as well. 34 Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own.

 

[ch33zw1z]

Quite a few of the 30+ year guys I work with lost about 50% of their 401k's back in '07-'08, they were ready to retire with more than .5mil... They're around today just trying to recoup some of that money to make their retirement a little better.

 

[theeedude]

whats the balance in the SS account?

Infinity.

 

[Jhhnn]

Yeah, the 401k retirement thing isn't working.

It works great for the financial elite, in a variety of ways. It limits liability to simple annual payouts. It also creates a lot of investors who aren't terribly attentive or skillful, ripe for the plucking with fees & market swings.

Having said that, anybody who has access needs to put in whatever it takes to get matching employer funds. Always. Free money up front & tax deferred status are what make the deal attractive at all.

 

[Jhhnn]

Quite a few of the 30+ year guys I work with lost about 50% of their 401k's back in '07-'08, they were ready to retire with more than .5mil... They're around today just trying to recoup some of that money to make their retirement a little better.

Ownership Society!

Wait... Wut? Who got owned?

 

[ch33zw1z]

Ownership Society!

Wait... Wut? Who got owned?

My coworkers did.

 

[stlc8tr]

Does this article (haven't read0 account for the fact that many people have more than one 401k (or have rolled them into an IRA)? Based on 401k balances, I have a ZERO balance. I currently have a Simple IRA (small company) and my previous 401k's have been rolled into IRA's.

The article cites figures for folks with just 401Ks and folks with both 401Ks and IRAs.

But one caveat is that the numbers are only for Fidelity accounts. So Vanguard and other brokerages do not count. The numbers also does not account for non retirement vehicles even if they may be used for retirement purposes.

 

[michal1980]

Infinity.

more insanity from the left.

 

[Engineer]

Quite a few of the 30+ year guys I work with lost about 50% of their 401k's back in '07-'08, they were ready to retire with more than .5mil... They're around today just trying to recoup some of that money to make their retirement a little better.

So they sold while the market was down? I rode my 401k down 64% (was very painful and I almost gave in and sold it when down 60%) and all the way back up to well into positive gains (i.e. higher than before I started at the start of the downfall of 07-08). They should be ahead of where they were unless they sold while down?!?!

 

[Exterous]

Is $165,000 enough to retire at 65? If you live another 20 years that's only 8,250 a year. If you factor in social security it's still not enough. I wonder what a gallon of milk and gas are going to be in 10-20 years. Inflation is going to be a bitch for most people.

Most people will not have enough to retire. All of their retirement hopes and dreams are all tied into their 401(k)s. I don't know the answer. Maybe diversifying is the best way to safeguard your retirement.

In other countries the children take care of their elder parents.
Maybe become a part time Walmart greeter until you die.

Figuring out wealth statistics is a tricky thing given the plethora of investment vehicles out there. So the average 401k balance is $165,000 but what about 403b, 457, Roth IRA, tIRA, brokerage account, fixed annuity, variable annuity, trusts (Very popular right now due to the interest rate manipulation) or pensions?

For example - current estimates of retirement income may be missing as much as 60% of the income earned from those investments:

The CPS measures the sources and amounts of income received by American households, including income from retirement plans. The Census Bureau's definition of income, however, includes only payments made on a regular, periodic basis. So monthly benefits paid from a defined benefit pension or an annuity are counted as income, while as-needed withdrawals from 401(k)s or IRAs are not.

The misperception about retirement income becomes clearer when other data are taken into account. For 2008, the CPS reported $5.6 billion in individual IRA income. Retirees themselves reported $111 billion in IRA income to the Internal Revenue Service. The CPS suggests that in 2008 households receiving Social Security benefits collected $222 billion in pensions or annuity income. But federal tax filings for 2008 show that these same households received $457 billion of pension or annuity income.

In combined terms, the Current Population Survey that ostensibly documents how poorly pensions and individual retirement plans provide retirement income ignores at least 60% of the income being delivered to retirees. Even that is not the whole story—because tax filings do not include distributions from Roth plans, since those distributions are not taxable.

http://online.wsj.com/news/articles/SB10001424052702304603704579329012635470796

What we had before but traded for 401ks were pensions.

I think there is ample evidence that we failed to handle pensions in a responsible manner. Sure it was\is great for those who get out before the system collapses but its going to screw those who can't. States continue to struggle with the pension burden and will continue to do so for decades

Quite a few of the 30+ year guys I work with lost about 50% of their 401k's back in '07-'08, they were ready to retire with more than .5mil... They're around today just trying to recoup some of that money to make their retirement a little better.

Then they suffered from two issues:
1) Improper asset allocation. For them to lose 50% close to retirement then they made some terrible allocation decisions. If you are close to retirement then you should be heavily in bonds (or something else less volatile than stocks). Bonds as a whole only really had a 3 month losing period any time from 2006-2010 (9/2008 until full recovery 12/2008. If you went for a particular term length then maybe it was a bit longer at about a year)
2) Buying high and selling low. Even if they suffered heavily from problem #1 if they had held on they likely would have fully recovered in 2011 or early 2012. If they are still around today trying to recoup some of that then they pulled out near or at the bottom and missed the best recovery time frame.

 

[spidey07]

So they sold while the market was down? I rode my 401k down 64% (was very painful and I almost gave in and sold it when down 60%) and all the way back up to well into positive gains (i.e. higher than before I started at the start of the downfall of 07-08). They should be ahead of where they were unless they sold while down?!?!

Buy high, sell low. What could possibly go wrong?

 

[spidey07]

Quite a few of the 30+ year guys I work with lost about 50% of their 401k's back in '07-'08, they were ready to retire with more than .5mil... They're around today just trying to recoup some of that money to make their retirement a little better.

If so then they deserved everything they got for having that much in stock so close to retirement.

Stupid should hurt, sounds like it did.

 

[Jhhnn]

If so then they deserved everything they got for having that much in stock so close to retirement.

Stupid should hurt, sounds like it did.

Heh. Or maybe they went for nice conservative bond funds that were annihilated in the collapse of MBS values.

Your little superior dance is always so cute.

 

[ch33zw1z]

Stupid should hurt

you must live a painful life.

 

[Genx87]

It works great for the financial elite, in a variety of ways. It limits liability to simple annual payouts. It also creates a lot of investors who aren't terribly attentive or skillful, ripe for the plucking with fees & market swings.

Having said that, anybody who has access needs to put in whatever it takes to get matching employer funds. Always. Free money up front & tax deferred status are what make the deal attractive at all.

Most people would do best to not play the market with their 401k's. The fee's can kill you. Most don't look at that 25-50 dollar fee as much. But many are buying up mutual funds per paycheck with that fee. As a % that can represent a large chunk. I can see how self directed accounts can lag behind the plan funds. People get churned with fee's and never get ahead.

If people have a fee fund they need to plan for it. Meaning build a lump sum up to get that fee under 1% as a percentage of sale.

As for market swings. Keep sector funds under 10% within the portfolio helps along with some kind of split on bond vs stock funds.

I regret not having a lot of cash around the crash. Lots of potential for wealth generation when it crashed.

 

[Zorba]

~40% of workers have no 401K access, and some of those who do pass up free money, don't participate. Many will exist on SS & whatever else they're eligible to receive.

And a large percentage of those that do have 401k access have HORRIBLE plans. I worked at a small company for 8 months. 5 years to vest, every single fund had loads over 3%, all had expense ratios of over 1.3%, annual fees on the account, fees to roll out, etc. Even though the market went up a lot while I was there, I think I broke even with how many fees there were.

So they sold while the market was down? I rode my 401k down 64% (was very painful and I almost gave in and sold it when down 60%) and all the way back up to well into positive gains (i.e. higher than before I started at the start of the downfall of 07-08). They should be ahead of where they were unless they sold while down?!?!

Most people are far too emotional to properly invest and end up buying high and selling low, there has been a lot of research on this and many pros fall into the same traps.

I now work for a major aerospace company with a very good 401k with a good match. My plan administrator is ING and they have a cool tool were you can compare your 401k to various demographics of the company, by age, years of service and pay range. I couldn't believe, people making 150-200K/yr aged 60-65 had an average of ~$160K in their 401ks and this was the highest. Our company match is 75% of 8%, and the highest deferral rate average was 9.5% from people 30-40 making 80-90K/yr.

 

[Zorba]

If you work 25 years @ $66k per year and put away 1%, you get $165k without any fluctuation. Whose fault it that you put away such a paltry amount for the entirety of your career?

Besides the fact your math is wrong. The median HOUSEHOLD income in 1989 was only $30,056/yr.

Cenus Data

 

[sportage]

Pensions like SS lasts forever.
For the most part, lasts forever. Lifetime.
Unions create pensions.
Government jobs provide pensions more often than not.
But the 401k?
Typically, most everyone planning to retire on SS plus their 401k will find themselves living off only their SS during the majority of their retirement span.
And you know what that means? The 75 year old Wally World greeter.
The 401k inception was in fact a scam, a gimmick.
The employee took all the risk while the employer reaped all the benefit.
Had nothing to do with providing retirement security.
Was never created for that purpose.
The 401k was built of greed, not out of concern for the laborer.
It's must be truly amazing for financial experts witnessing how the 401k progressed as far as it has let alone actually linked to retirement security.
Especially when that was not the intention for creating the 401k.

It sits out there, fully exposed like a lonely duck in the middle of a lake, unaware of the predator near by.
The predator awaits quietly, hidden out of sight, in anticipation of the kill.
The 401k our duck, the predator financial insecurity.
Which would you put your money on to succeed?
Quack quack while you can little ducky.
It's all an illusion.

 

[Jhhnn]

So they sold while the market was down? I rode my 401k down 64% (was very painful and I almost gave in and sold it when down 60%) and all the way back up to well into positive gains (i.e. higher than before I started at the start of the downfall of 07-08). They should be ahead of where they were unless they sold while down?!?!

Lots of retirees depend on returns from their investments. When the returns are negative, they still need the money, so they end up reducing the principal even further. The crash was an enormous setback for such people.

 

[ivwshane]

Figuring out wealth statistics is a tricky thing given the plethora of investment vehicles out there. So the average 401k balance is $165,000 but what about 403b, 457, Roth IRA, tIRA, brokerage account, fixed annuity, variable annuity, trusts (Very popular right now due to the interest rate manipulation) or pensions?

For example - current estimates of retirement income may be missing as much as 60% of the income earned from those investments:



http://online.wsj.com/news/articles/SB10001424052702304603704579329012635470796



I think there is ample evidence that we failed to handle pensions in a responsible manner. Sure it was\is great for those who get out before the system collapses but its going to screw those who can't. States continue to struggle with the pension burden and will continue to do so for decades



Then they suffered from two issues:
1) Improper asset allocation. For them to lose 50% close to retirement then they made some terrible allocation decisions. If you are close to retirement then you should be heavily in bonds (or something else less volatile than stocks). Bonds as a whole only really had a 3 month losing period any time from 2006-2010 (9/2008 until full recovery 12/2008. If you went for a particular term length then maybe it was a bit longer at about a year)
2) Buying high and selling low. Even if they suffered heavily from problem #1 if they had held on they likely would have fully recovered in 2011 or early 2012. If they are still around today trying to recoup some of that then they pulled out near or at the bottom and missed the best recovery time frame.

Pensions were no doubt handled poorly towards the end of their popularity but that's easily fixed compared to using 401k's as a retirement fund that actually allows people to retire.

In my opinion I think pensions created better employees or employees who were at least invested in the companies well being. 401k's allow people to company hop whose primary concern is themselves (and I certainly don't blame them for that).
But that's just my opinion and I don't have any data that would confirm or disprove my feeling.

 

[Zorba]

Pensions like SS lasts forever.
For the most part, lasts forever. Lifetime.
Unions create pensions.
Government jobs provide pensions more often than not.
But the 401k?
Typically, most everyone planning to retire on SS plus their 401k will find themselves living off only their SS during the majority of their retirement span.
And you know what that means? The 75 year old Wally World greeter.
The 401k inception was in fact a scam, a gimmick.
The employee took all the risk while the employer reaped all the benefit.
Had nothing to do with providing retirement security.
Was never created for that purpose.
The 401k was built of greed, not out of concern for the laborer.
It's must be truly amazing for financial experts witnessing how the 401k progressed as far as it has let alone actually linked to retirement security.
Especially when that was not the intention for creating the 401k.

It sits out there, fully exposed like a lonely duck in the middle of a lake, unaware of the predator near by.
The predator awaits quietly, hidden out of sight, in anticipation of the kill.
The 401k our duck, the predator financial insecurity.
Which would you put your money on to succeed?
Quack quack while you can little ducky.
It's all an illusion.

:thumbsup: 401Ks (as opposed to pensions) are just another scam on the middle class to enrich wall street. Too bad even most democrats I know in real life think that unions are evil. :'(

 

[MagickMan]

more insanity from the left.

It's not insanity, it's willful ignorance. That's all they have left.

 

[loganone]

Speaking of scams..

But it is now official: Social Security is a lousy investment for the average worker. People retiring today will be among the first generation of workers to pay more in Social Security taxes than they receive in benefits over the course of their lives, according to a new analysis by the Associated Press.

Read more: Social Security Benefits Less Than What Workers Put In | TIME.com http://business.time.com/2012/08/07/social-security-now-takes-more-than-it-gives/#ixzz2tH47FjQE

If you're under 40 you would be better off stuffing money into a mattress than you are paying into Social Security.

 

[stlc8tr]

Lots of retirees depend on returns from their investments. When the returns are negative, they still need the money, so they end up reducing the principal even further. The crash was an enormous setback for such people.

You shouldn't be withdrawing more than 4% a year from retirement funds so if folks followed that rule of thumb, they wouldn't have been dented too badly by a couple of bad years.

 

[Ausm]

I thought 401(k) balance averages would have been higher...much higher...

http://money.cnn.com/2014/02/13/retirement/401k-balances/index.html

This was the most shocking part to me though:

People on the verge of retirement, ages 55 to 64 years old, saw their nest eggs grow to an average balance of $165,200 from $143,300 in 2012.

Just think if the Rethugs had their way it would've been much smaller.