7. What percent of 401k plan sponsors say most of their employees are/will be financially prepared for retirement?

13% – according to a 2010 Deloitte/IFEBP survey.

If 401ks were helping most employees achieve a successful retirement, shouldn’t the response be around 93% – not 13%?

Why are plan sponsors so pessimistic? Perhaps it’s because they know that even their ‘model participants’ may come up short. Employees in their 60s, who have worked for the same employer for at least 30 years (something most employees don’t do)  have an average account balance of around $190,000. (EBRI).

But that’s not good. In 401ks, averages are misleading. A few employees have very large accounts and many employees have small balances. The median 401k balance (50% over, 50% under) is often less than half of the average 401k balance. So, even among the model 401k participants, most of them should expect around $333 a month assured for a lifetime with an account balance of $100,000 (see question 3).

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