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

[Liberal_in_LA]

Retiring Boomers Find 401(k) Plans Fall Short .

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.

http://online.wsj.com/article/SB10001424052748703959604576152792748707356.html

[SoCalNative]

1. This is what corporate greed has wrought

and it is only the beginning.

[rzemanfl]

2. I have a friend who put in the maximum amount every year.

Except for the tax deduction he would have been better off burying the money in mason jars in the yard.

[hughee99]

3. I'm not exactly sure how much of an indictment of the 401k this is, though

The 401k is 32 years old, which means most retiring workers didn't start with one, and many didn't have the option until the late 80's at the earliest. Unfortunately for those retiring now, they're starting to cash out at the worst time (after an enormous dip and before a recovery). All in all, after seeing what is being done to "guaranteed" pensions, I'll stick with my 401k.

Granted, I'm under 40 and have been in my 401k for almost 16 years now, so I may not fully understand the magnitude of the issue not having the personal experience of trying to retire now.

[SoCalDem]

6. eye opening stats

interactive calculator thingie
http://www.usnews.com/usnews/biztech/articles/070810/10roth401k.age.htm



and this article

I believe the following figures are 2005 figures

the following is important because it shows that the average 401k amount does not represent an accurate look at individuals balances.

“The bottom line is that most people do not have the ability to contribute significant amounts of their income to a 401k plan. The IRS allows people to contribute about $14,000 /year into a 401k plan but only a small number of workers, professionals generally making over $200,000/year, can do so. Most everyone else contributes far less. A telling statistic is that the average 401k plan has about $67,000 in it. If you retire at 65 and have a life expectancy of 20 more years, $67,000 will not take you very far. But the problem with this statistic is that it is an average; the more revealing statistic is that the median amount (ie the middle point)of 401k plan balances is $17,000. When you have this large discrepancy between the average and the median, you do not get a nice bell-shaped statistical graph but something more like an inverted bell-shape as the values skewed higher at the exterminies of the values. In plain language, there are many people with high balances and many with very low balances and not too many in between.”

The above is from http://brianleon.com/notes/?p=567

[Hydra]

4. "No one could have foreseen this!"

Wall Street suckered everyone into putting their pension money in their hands.

Any wonder they got scalped?

[SoCalDem]

5. If it was not so sad, it would be funny..

Our 401 k lost $26,000 when things crashed a while back..and even with my husband working a few extra years, we will have very little in it (compared to what we "should" have)

What people have never understood, is that when so much is already withheld from paychecks, MOST people cannot now (or ever could) "afford" to have even more taken out..even if part of it was being matched.

Years back, when I mused here, that when we boomers were ready to stop paying IN, and started taking OUT, it would be a nightmare scenario.....

I was roundly attacked for being silly... and was told that our stock market was SO HUGE, and vibrant that it would be but a tiny "blip", and would not be a problem..

Common sense would tell you that when the largest generation all started retiring together and wanting/needing their money OUT, instead of continuing to put in, there would have to be an effect..and many of us here have been predicting the crash-thing for YEARS before it happened.