13 Interesting Stats About Our 401k

Having statistics in 401k articles are as common as cheese at Mcdonalds.  Here are 13 more so we don’t buck the trend.

  1. Only about half of American workers have a retirement plan.
  2. When a retirement plan is available, only two thirds of the people join
  3. 10% of all workers who are offered 401k plans contribute to the max
  4. 60% cash out all or part of their 401k balance when they change jobs
  5. With a $20,000 investment earning 6.5% a year, a 1.5% annual expense would have your investment go up to $58,400.  If the expense is reduced to 0.5%, the same $20,000 grows to $70,500.
  6. You can have $6,500 of monthly income if you saved $10% of you $100,000 paycheck from age 40 until 65 (assuming 3% annual pay raise, 7% annual return and $200k already invested)
  7. If the 401k drops 20% at retirement, the monthly income will drop to $5,200.
  8. But if instead, you saved 15% of your income instead of 10% with the same assumptions that it drops 20% at retirement, you will still have a $6,300 monthly income.
  9. If you have an asset allocation of 45% bonds and 55% stocks and the next 5 years gives above average returns, not increasing your withdrawals based on inflation will increase the chances that your money will last from 76% to 88%.
  10. Now with the same asset allocation but with only average returns, not withdrawing more each year to account for inflation still increases your chances of money lasting from 61% to 78%.
  11. If you have 100% bonds though and there’s an average return for the next five years, not increasing withdrawal amounts would increase the chances from 31% to 66%.
  12. In 2006, 38% of 401k investors nearing retirement had 80% or more in stocks.
  13. The average account balance of these investors near retirement have fallen more than 20% in the past 12 months.

With 401ks and statistics, it’s important to remember that assumptions are written all over.  Just read them for fun but don’t take them too seriously.  Instead, spend more time to save more and keep investing for the long run.  With no pension plans, people who don’t will have a big reality check early in retirement.

Tagged as: Retirement

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