Have a 401(k)? Retirement prospects fairly good
People with access to 401(k) plans for at least 30 years are on track for a reasonably comfortable retirement.
That's the upshot of a study measuring how Americans will fare in retirement.
The combination of Social Security benefits and 401(k) savings will provide most people with at least 60 percent of their inflation-adjusted pre-retirement annual income, according to the analysis by the nonpartisan Employee Benefit Research Institute.
More than four in five American workers — 83 percent to 86 percent — are likely to generate 60 percent or more of their pre-retirement income, the study calculates.
Between 73 percent and 76 percent of people will achieve 70 percent of pre-retirement income, the analysis finds.
A general rule of thumb is that workers need about 70 percent of pre-retirement income for a fairly comfortable retirement.
The EBRI study covers people who are eligible for 401(k)s, not those who participate. About 73 percent of workers with access to 401(k) plans take part, according to EBRI.
The ability to generate 60 percent to 70 percent of pre-retirement income is encouraging, considering the often bleak retirement statistics in many other analyses.
“I would think that's a very different message — a more optimistic message — than has been conveyed” in other studies, said Jack VanDerhei, EBRI research director.
There are several caveats.
The study assumes that Social Security benefits will not be cut, an uncertain prospect given the political controversy over the program.
More than that, many Americans simply don't have access to 401(k) plans. Only 59 percent of workers 16 and older are eligible to join a plan, according to EBRI.