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The surging stock market helped boost average 401(k) balances to yet another record high in 2013. But many young and low-income workers are not doing such a great job of keeping that cash in their accounts.
The average 401(k) balance hit $89,300 at the end of the year, up 15.5% from $77,300 in 2012, according to an annual tally by Fidelity Investments. Most of the boost came from stock market gains as all three major stock indexes ended the year more than 20% higher
People on the verge of retirement, ages 55 to 64 years old, saw their nest eggs grow to an average balance of $165,200 from $143,300 in 2012, Fidelity said. Savers with both a 401(k) plan and Individual Retirement Account managed by Fidelity had larger nest eggs, with an average balance of $261,400, up from $225,600 in 2012.
Yes that is what happens to investments when the S&P 500 has a banner year. Thank goodness the printing machines have not broke down yet.
I agree a couple hundred grand isn't enough, but it's still a record. It helps, if nothing else. If CD rates were 6% (which they will be), then $200K should give you about $700 a month after tax. I remember in the 1990s, Fidelity etc would send reps to the corporations to preach to the young people about how they would have $5 million in their 401K at 60 yr if they invest 10% from every pay check starting in your 20s. What a crock.
That is not incorrect. If someone invests in their retirement starting in their early 20's they can achieve a retirement balance of $1 millions or more. This would require a 10% to 15% employee contribution plus the typical company match of 50%. Do the math. This is true based on past performance. However, the major problem with 401(k) is Loans. About 50% (plus or minus) of employees put the money into the account and then take a loan against it. This defeats the purpose of having the money in the account, compounding----and most seriously hampers anyone from having a sizable retirement account..
That is not incorrect. If someone invests in their retirement starting in their early 20's they can achieve a retirement balance of $1 millions or more. This would require a 10% to 15% employee contribution plus the typical company match of 50%. Do the math. This is true based on past performance. However, the major problem with 401(k) is Loans. About 50% (plus or minus) of employees put the money into the account and then take a loan against it. This defeats the purpose of having the money in the account, compounding----and most seriously hampers anyone from having a sizable retirement account..
I have done the math, and I have put in the max every year since my 20s, and I will not have 5 million in 401K when I retire, and nor do I know anyone who thinks they will. It was a sales pitch, but it's OK, because 401K is a good way to save for retirement even if you don't have millions in your account at 65.
It's simple: The more money retirees have saved up for retirement, the less help they will need from the tax payers.
Quote:
Originally Posted by pknopp
And yet those rolls are growing.
The biggest dependency roll is senior citizens. Medicare, Medicaid for seniors, and SS make up 40% of the budget and its growing. Is anyone doing anything about it..nope? Republicans ran to the left of Democrats and got 60% of the senior vote in 2010.
Obama's proposed MyIRA would have made sure people didn't get those gains.
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