TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Have a 401(k)? Retirement prospects fairly good

About The Tribune-Review
The Tribune-Review can be reached via e-mail or at 412-321-6460.
Contact Us | Video | Photo Reprints

By The Los Angeles Times

Published: Saturday, Jan. 25, 2014, 9:00 p.m.

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.

 

 
 


Show commenting policy

Most-Read Business Headlines

  1. Google challenges nonprofits on ideas to use Glass
  2. PNC’s CEO elected board chairman
  3. Corbett: Coal is working
  4. ‘Old GM’ defense expected in court fight over faulty ignition switch
  5. Record cold facilitates coal’s comeback
  6. Drugmakers ready to carve out deals any way they can
  7. McDonald’s profit slips amid weak sales
  8. AT&T joins crowded field with online video plans
  9. Tesla delivers  1st cars in China
  10. Winning streak for stocks continues
  11. BNY Mellon notches $661M profit in 1st quarter
Subscribe today! Click here for our subscription offers.