Results 1 to 2 of 2

Thread: Retiring Boomers Find 401(k) Plans Fall Short

  1. #1
    Havakasha is offline
    Havakasha's Avatar
    Joined: Sep 2009 Posts: 5,358

    Retiring Boomers Find 401(k) Plans Fall Short

    Just more evidence that privatizing social security would be a huge mistake.

    Jason Henry for The Wall Street Journal
    Patti and Bob Webster had planned to retire in North Carolina but say they need to keep working.

    The 401(k) generation is beginning to retire, and it isn't a pretty sight.

    The retirement savings plans that many baby boomers thought would see them through old age are falling short in many cases.

    The median household headed by a person aged 60 to 62 with a 401(k) account has less than one-quarter of what is needed in that account to maintain its standard of living in retirement, according to data compiled by the Federal Reserve and analyzed by the Center for Retirement Research at Boston College for The Wall Street Journal. Even counting Social Security and any pensions or other savings, most 401(k) participants appear to have insufficient savings. Data from other sources also show big gaps between savings and what people need, and the financial crisis has made things worse.

    This analysis uses estimates of 401(k) balances from the end of 2010 and of salaries from 2009. It assumes people need 85% of their working income after they retire in order to maintain their standard of living, a common yardstick.

    Facing shortfalls, many people are postponing retirement, moving to cheaper housing, buying less-expensive food, cutting back on travel, taking bigger risks with their investments and making other sacrifices they never imagined.

    "Inevitably, we find that, for the average person, there is not enough there," says financial adviser Paul Merritt of NTrust Wealth Management in Virginia Beach, Va., who has found himself advising many retirement-age people with too little savings. "The discussion turns out to be: What kind of part-time work do you want to do after you retire?"

    He has clients contemplating part-time work into their 70s, he says.

    Tax-deferred 401(k) retirement accounts came into wide use in the 1980s, making baby boomers trying to retire now among the first to rely heavily on them.
    Last edited by Havakasha; 02-20-2011 at 03:06 AM.

  2. #2
    SiriuslyLong is offline
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    Good article Lloyd. I think part of the problem is that many don't take the time to learn a little about investing (or maybe they can't?). My company takes time to make appointments for the employees to discuss their 401k's with "experts". The guy just laughed at me because I had it "in order", and when I asked if this wasn't the case for the majority, he rolled his eyes.

    One guy I work with was 68 and had most of his money in aggesive growth. Although he is "conservative" maybe he'd be better off having the government do it for him lol.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts