The Average 401(k) in America is Less Than $75,000
If you follow the Annuity Think Tank blog you will know that we strongly believe that our country is on the verge of facing a monstrous retirement crisis. The ‘good ol days’ of your parent’s pension is long gone and we are all forced to fend to ourselves with defined contribution plans such as a 401(k). This week we saw the results from a Fidelity survey on 401(k)’s that further confirmed our fears.
Fidelity Investments did a 401(k) study using a 12 million participant base to get solid numbers, and there findings were scary. The study found that the average 401(k) is sitting at $74,600 at the end of the first quarter 2012. And keep in mind, the market is down quite a bit now compared to that time frame. For those of you who might not grasp the severity of this, let me explain it to you with a real life example.
A teacher that puts in 35 years of service educating American youth today will receive approximately $38,000 per year for life in the form of their pension. Assuming this teacher is 65 when he or she retires, and lives to age 85, that is $760,000 ($38,000 x 20) that is paid out over those 20 years. Now can you begin to see what a joke $75,000 in a 401(k) is if that is your entire retirement savings. Wake up people and start saving for retirement. At this rate only the elite will ever afford to retire and we will have a nation of 85 year olds still looking for employment.