Average 401k balance$

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Average 401k balance$

Postby bottomfisher » Thu Feb 14, 2013 4:28 pm

A recent thread on the site made me very self conscious about our savings rate compared to others out there: viewtopic.php?f=10&t=110538&newpost=1613996

Then I came across this article: http://www.cnbc.com/id/100459687 reporting the average Fidelity 401k balances at the end of 2012. I feel much better about our investment balances now in comparison to other Americans rather than comparing to posters here. I still have much room for improvement though. I recognize it doesn't take into account other investment vehicles i.e. taxable accounts, 457, 403b, HSA, etc but it gives me fair insight in light of the limitations of such a comparison.

The amounts that investors have saved through their 401(k)s vary widely depending on a participant's age. Fidelity said the average year-end balances were $143,300 for participants 55 and older and not yet retired; $120,400 for baby boomers born from 1946 to 1964; $59,100 for Generation Xers born from 1965 to 1978; and $15,400 for those in Generation Y, born from 1979 to 1991.
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Re: Average 401k balance$

Postby livesoft » Thu Feb 14, 2013 4:32 pm

It seems that if no one made any contributions to their 401(k) plan in 2012, that the average 401(k) would have grown by 12% just from the increase in the stock and bond markets. This was noted in the comment section to the article despite this in the article:
Fidelity estimates that about two-thirds of last year's increase in the average 401(k) balance was attributed to investment returns and one-third to worker contributions and employer matches.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Average 401k balance$

Postby hsv_climber » Thu Feb 14, 2013 4:35 pm

Not every person uses Fidelity. And even those who do, often have IRA accounts at other places in the same time.
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Re: Average 401k balance$

Postby EternalOptimist » Thu Feb 14, 2013 4:38 pm

If this represents an actual physical audit of Fidelity's customers (as opposed to a survey) it probably doesn't account for all of the assets that an average client has. Actually, it may only represent 30-40% of total investable assets. I've read studies that said that the average American approaching retirement has ~$125,000.
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Re: Average 401k balance$

Postby hsv_climber » Thu Feb 14, 2013 4:38 pm

One more thing about 401k... Let say a person A goes from job to job to job every year while maxing out his 401K contribution. Fidelity will most likely show him at $17K, since other accounts would be Rollover IRAs.
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Re: Average 401k balance$

Postby dkturner » Thu Feb 14, 2013 4:43 pm

hsv_climber wrote:One more thing about 401k... Let say a person A goes from job to job to job every year while maxing out his 401K contribution. Fidelity will most likely show him at $17K, since other accounts would be Rollover IRAs.
.

Or in a half dozen other 401(k) plans scattered around the country.
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Re: Average 401k balance$

Postby Grt2bOutdoors » Thu Feb 14, 2013 4:58 pm

All I can say is if your final retirement balance is $125K with no defined benefit pension benefit and no other significant taxable assets, you will not be living in my neighborhood come retirement time. It's just too expensive. That's why I keep seeing homes up for sale by the older folk - they can't pay the taxes.
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Re: Average 401k balance$

Postby NYBoglehead » Thu Feb 14, 2013 5:02 pm

These articles tell us absolutely nothing. The theme is that 401k balances went up, which is a good thing. The huge groupings of ages are not helpful whatsoever. Those born between 1979-1991 have an average balance of X. The person born in 1979 will be 34 years old this year and should have 10+ years in the workforce and had an opportunity to buy shares cheap in 2008/2009. The kid born in 1991 probably has only a few months on the job and might have $1,000 in it.
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Re: Average 401k balance$

Postby jdilla1107 » Thu Feb 14, 2013 6:24 pm

These stats are silly. People roll over their balances. My 401k balance at fidelity is 18k. My net worth is seven figures.
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Re: Average 401k balance$

Postby camaro327 » Thu Feb 14, 2013 6:51 pm

jdilla1107 wrote:These stats are silly. People roll over their balances. My 401k balance at fidelity is 18k. My net worth is seven figures.


Yep. Its garbage in and garbage out. No way to account for IRAs, annuities, etc.
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Re: Average 401k balance$

Postby caroljm36 » Thu Feb 14, 2013 6:53 pm

hsv_climber wrote:Not every person uses Fidelity. And even those who do, often have IRA accounts at other places in the same time.


Exactly. And I reduced my 401k contribution last year to build up my emergency fund after using it for surprise medical expense. Then I upped again it this year upon reaching my goal.

There could be any number of other things going on...I hope people aren't using these stats to make some sort of case for..whatever, I won't go there. :happy
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Re: Average 401k balance$

Postby NYBoglehead » Thu Feb 14, 2013 7:20 pm

caroljm36 wrote:
hsv_climber wrote:Not every person uses Fidelity. And even those who do, often have IRA accounts at other places in the same time.


Exactly. And I reduced my 401k contribution last year to build up my emergency fund after using it for surprise medical expense. Then I upped again it this year upon reaching my goal.

There could be any number of other things going on...I hope people aren't using these stats to make some sort of case for..whatever, I won't go there. :happy


These stats will become increasingly more meaningless in the years to come. As fewer people have pensions and a larger percentage of the workforce has 401ks, there will be a tug of war on the average balance as workers either roll them into IRAs in retirement or take distributions from the 401k on one side while others contribute during their working years on the other. Completely meaningless statistic.

Per the 2010 US Census, there are more than 7 million teachers, so this leaves out those 7 million that have 403b or 457 accounts. There are also 2.7 million federal civilian employees with access to the TSP, and another 1.5 million military members with access to the TSP.
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Re: Average 401k balance$

Postby texasdiver » Fri Feb 15, 2013 1:32 am

It's too bad we don't actually have more meaningful statistics as this is one of the biggest public policy issues facing this country today.

Conducting an actual survey that controls for all the variables mentioned in this thread that randomly samples across different age cohorts, income levels, professions, and regions would not be difficult and should be something the government collects on a regular basis. Instead we have to read this sort of useless self-serving nonsense in the so-called financial press.
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Re: Average 401k balance$

Postby JamesSFO » Fri Feb 15, 2013 1:41 am

Numbers in these general ranges have been matched by other surveys for example the boston center for retirement research has a variety of data: http://crr.bc.edu/data/

Pew has done similar studies.

This Fidelity report suffers the same limitations as Vanguard's own similar report, but also is not as far off the mark as one might think.
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Re: Average 401k balance$

Postby JamesSFO » Fri Feb 15, 2013 1:44 am

texasdiver wrote:It's too bad we don't actually have more meaningful statistics as this is one of the biggest public policy issues facing this country today.

Conducting an actual survey that controls for all the variables mentioned in this thread that randomly samples across different age cohorts, income levels, professions, and regions would not be difficult and should be something the government collects on a regular basis. Instead we have to read this sort of useless self-serving nonsense in the so-called financial press.


There are private surveys of this information: http://crr.bc.edu/data/crr-surveys/ Pew similarly does surveys. These results are not that far off these other studies.
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Re: Average 401k balance$

Postby john94549 » Fri Feb 15, 2013 10:56 am

I suspect one problem with compiling data is the lack of shared information. Last I checked, Vanguard knew how much I have there, but I doubt they know how much I have at Schwab. Fidelity knows how much my wife has there, in a 401K she never bothered to roll-over, but no clue about the balance in her current 401K, or her TIRA at Vanguard. And nobody has an inkling of how much we have in IRA CDs, other than the IRS. So where do these stats about "the average person aged (fill in the blank)" having such and thus saved for retirement come from? And what about funds just plopped in an after-tax, garden-variety, savings account, or CD? Or an after-tax mutual fund? Or other taxable investments (think individual stocks or bonds)? Even the IRS wouldn't know if these were "retirement" funds, or just "stuff".

If you count only 401K and IRA balances as "retirement" savings, then my Mom (who is 97) would register as having nothing saved for retirement. Which would come as a surprise to her.

As to "surveys", I would suggest they are only as good as the sample of folks surveyed, the questions posed, and the trustworthiness of the responses provided. We learned a bit about that in the run-up to the recent election.

I'd take all these "statistics" with more than a grain of salt.
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Re: Average 401k balance$

Postby digit8 » Fri Feb 15, 2013 12:23 pm

texasdiver wrote:It's too bad we don't actually have more meaningful statistics as this is one of the biggest public policy issues facing this country today.

Conducting an actual survey that controls for all the variables mentioned in this thread that randomly samples across different age cohorts, income levels, professions, and regions would not be difficult and should be something the government collects on a regular basis. Instead we have to read this sort of useless self-serving nonsense in the so-called financial press.



I honestly can't even conceive of what the parameters would be for a fully honest and accurate retirement planning survey. Polling individuals, given the widespread lack of financial literacy and realism about retirement needs in this country doesn't seem like it would be helpful. And surveys of a particular plan type or fund company are inherently too limited to really paint the picture. As a few posters have mentioned, the data from this study at least jibes with some others, but it all seems maddeningly fuzzy. Which makes me nervous, which makes a retirement crisis seem more likely, which makes me more nervous....and so on.
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Re: Average 401k balance$

Postby DetroitRed » Fri Feb 15, 2013 12:32 pm

Sources that use the Federal Reserve's Survey of Consumer Finances (SCF) tend to give a better picture because it tracks all types of retirement funds (401k, IRA, Roth IRA etc.).

The problem for lay people (and journalists) who want to use SCF is that there's a lag (most current available is 2010) and you have to clean up the data in order to use it because they oversample wealthy people.
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Re: Average 401k balance$

Postby KyleAAA » Fri Feb 15, 2013 12:34 pm

I don't really think average 401k balance has much meaning. I've only been at my current company for about 2 years, so my 401k balance is quite small compared to my total net worth. In a world where the average person will increasingly change jobs every 5-7 years, 401k balances aren't all that meaningful if you're trying to figure out how much people have saved for retirement.
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Re: Average 401k balance$

Postby NYBoglehead » Fri Feb 15, 2013 12:35 pm

^While I think there will be a generation that hasn't adequately prepared for retirement, I think younger people will adjust to the new normal of not counting on a DB pension and will be much better savers than their parents were.

A lot of young people (myself included) completely disregard whatever Social Security benefit we might receive (even though the most dire projections say that FICA taxes will cover ~77% of benefits starting in ~2033 when the trust fund is exhausted). So if you plan on receiving nothing whatever you end up getting will be a net benefit to your retirement calculations.
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Re: Average 401k balance$

Postby Bharat » Fri Feb 15, 2013 12:40 pm

Was there ever a poll or thread that discussed people's combined retirement account 401K+IRA balances? I couldn't find it in my site search.
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Re: Average 401k balance$

Postby Default User BR » Fri Feb 15, 2013 4:29 pm

The Brightscope info for MyMegaCorp says the average is $130,000 per participant.


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Re: Average 401k balance$

Postby BigOil » Fri Feb 15, 2013 9:22 pm

BrightScope for GlobalBigHugeCo
Avg Account Balance $430,000

I'd imagine this is at the upper end as there are very few lower wage Employees here.
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Re: Average 401k balance$

Postby market timer » Fri Feb 15, 2013 9:35 pm

A more complete picture is provided by the Survey of Consumer Finances: http://www.federalreserve.gov/econresda ... findex.htm
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Re: Average 401k balance$

Postby letsgobobby » Fri Feb 15, 2013 9:36 pm

my 401k balance is $0. I have never had access to one.
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Re: Average 401k balance$

Postby learning_head » Sun Feb 17, 2013 6:57 am

market timer wrote:A more complete picture is provided by the Survey of Consumer Finances: http://www.federalreserve.gov/econresda ... findex.htm


Interesting stats there... Here is one that surprised me the most: guess what the average Net Worth is of all college graduates in US... According to 3rd row from last in table 4 (on pg 17) in http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf, in last decade it was very close to.... $1Million!!! Now, granted, average is misleading and the mean was instead more like 200k-300k through the decade, but just goes to show
- how much averages could be misleading, and
- still surprisingly high to me

P.S. I decided to post a separate thread on this one (http://www.bogleheads.org/forum/viewtopic.php?f=10&t=111200#p1616364), so as not to hijack this thread...
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