Wednesday, July 25, 2007

Study: U.S. 401(k) Savings Rates Up



Fidelity just released a study that says the median 401(k) balance rose 30% this year. While some of gain is likely attributable to the rather robust (if not chaotic stock market this year, the other 20% or so is a result of people socking more money away. I'm not trying to knock the results here, because any time people take a second look at their investments and put a little more money away for later rather than spending it on a Jamaican vacation I approve. BUT, when you look at the figures cited in the study they are pretty abysmal. Below are the average 401(k) balances for different groups.
  • Baby Boomers rose 7 percent to $38,000
  • Gen Xers rose 10 percent to $15,000
  • Gen Yers rose 21 percent to $2,100
Now here are the average contribution rates.
  • Baby Boomers 7.7 percent
  • Gen Xers 6.2 percent
  • Gen Yers 4.6 percent
Hopefully what the statistics don't show is that there is quite a bit of other money that is being invested elsewhere outside the 401(k) plans in vehicles like Roth, or traditional IRA accounts... unfortunately I would guess there is not.

Related Article:
401(k) Flubs 5 to avoid @ CNN