2014 August 23 Saturday
Average 401k Retirement Account: Sign Of Future Oldster Poverty

Boomers have an average of $127k in their 401k accounts. That's way way short of what they need in their 50s and 60s.

Except for some government workers defined benefit retirement plans are road kill from the last 30 years of bankruptcies, mergers, buy-outs, and restructurings. Few companies are offering them.

Auto-enrollment is helping. But still a third of Americans have no retirement savings. You might think they are younger. But

About a quarter 26% of those ages 50 to 64 haven't started saving for retirement, the survey said; the figure was 33% of people 30 to 49 years old.

Some people are just expecting to work their entire lives. But their bodies won't hold out and neither will their skill sets. Brain aging especially makes that an unrealistic expectation. But even before taking that into account if one's job gets automated out of existence the learning curve to get back up to a comparable salary is so long that job losses in late middle age usually mean a much lower working salary for the rest of a person's working life.

Most humans lack the capacity to effectively plan and execute on a career and retirement strategy. Younger and less skilled generations are going to take the biggest hit.

Share |      By Randall Parker at 2014 August 23 08:49 PM 

Nick said at August 24, 2014 2:06 PM:

I have more than that in my 401k and I'm 31. I'm not working now though and focusing on a PhD and a few websites. God knows what'll happen in 30 years, from wars, to government confiscation of assets. You're right to encourage people to invest in their skills and broaden their horizons. Ideally I'll have several income streams within a few years that'll cover my expenses and fund investments (both financial and business/educational).

It's going to be tragic once these millions of people lose jobs or are simply incapable of working and have no retirement. For people in their 30s or 40s who've failed to start saving for retirement, it's already too late to expect to retire at 65, let along those 50+. The government "safety net" is going to tear, kind of like when you see fish spill out onto the deck of a ship.

Dan said at August 26, 2014 7:29 AM:

What we can expect is for the government to make every effort to meet its obligations and take care of the old, even if it can't with sound money. So it will print and dilute everyone's assets. This means this is your problem and my problem. We have to assume inflation will hurt our savings and our finances even if we personally did everything right.

Mike Street Station said at August 26, 2014 1:28 PM:

Considering the average Social Security benefit is about $14,169.00 a year and a prorated 4% interest only draw of the 127K is about $5080.00 a year, thats almost 20K a year. Poor, but not starving. You might as well work until you are physically unable in that case.

LEFTISTCONSERVATIVE said at August 29, 2014 5:31 PM:

nonsense. 127k is plenty assuming you do not have to pay rent and you have some pension or social security. In fact, if you are 62 years old and have 127K and no rent or mortgage payment, you will do fine.
200$ a month for food; 250 for utilities and internet; 30 a month for property tax; 40 a month for car insurance. Gasoline and car maintenance will be negligible. Go on obamacare and you will have a full subsidy with no or little taxable income.

Rent, gas, car insurance, healthcare and maintenance are the main expenses of the urban worker. Once you retire and go on obamacare, living in a cheap house in a low tax state, your expenses are minimal.

Randall Parker said at August 30, 2014 10:17 AM:


What about the 62 year old who rents? Suppose they went bankrupt at age 55. Some people did in the last financial crisis.

Then there is property tax. Some people have $500 per month (and more) just from property tax. Some people need a new roof on their house.

Urban worker: Suppose your city or suburb goes into a downward spiral. Your housing price plummets. You gotta move for safety's sake. The old house isn't going to give you enough money to buy a new house. As you get older you become easier prey to the thugs wandering around. This happens. It can happen in the span of just 10 years. The US government funds this kind of transition with Section 8 housing.

But even if you have low property tax and your town doesn't go hell you still need more money if you develop a disability that requires you to pay for help. Can't mow the lawn. Need someone else to go to the store if your macular degeneration takes away your ability to drive. You might require physical therapy, maybe someone to cook and clean for you.

shiva1008 said at September 19, 2014 6:55 AM:

A collection of zeroes and ones in an electronic circuit is hardly antifragile. That's why I would rather spend my money while it's still worth something. Y'all worry too much... just be like, all cool. Some countries like Argentina go through complete financial resets like every decade or two LMAO

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