Retirement Savings Gap
Recent data on how much money people have tucked away in their 401(k) plans highlights just how far most Americans have to go to reach their retirement savings goals.
According to recent data from a wealth management firm, Fidelity Investments, the median balance for 401(k) participants in the third quarter was $23,800. Savings were even slimmer for other types of retirement plans, with median savings of $20,600 for 403(b) accounts and $14,500 for individual retirement accounts.
One measure of how many people are likely to fall short: A survey conducted by brokerage firm Charles Schwab in August found that Americans say they need $1.8 million to retire comfortably.
Fidelity's data, which is based on an analysis of the roughly 45 million retirement accounts it manages, also reveals significant differences in account balances across different generations. Baby boomers, who have had longer to save, lead all groups with an average of $212,600 saved in 401(k) accounts, $196,600 in 403(b) accounts, and $201,640 in IRAs.
According to a recent survey by Credit Karma, many baby boomers are approaching retirement without any savings. Similarly, a report from the National Institute on Retirement Security revealed that millions of Generation-X Americans only have $40,000 in savings.
A certified financial planner in Georgia, Kamila Elliott, suggests that one of the most effective ways to increase a 401(k) balance is to direct pay raises from employers into the retirement account. Elliott emphasized that Americans often fail to adjust their contributions to their employer-sponsored retirement accounts as their income increases.
