Retirement prospects are fairly good for people with 401(k) plans
The combination of Social Security benefits and 401(k) savings will provide most people with at least 60% 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 – between 83% to 86% – are likely to generate 60% or more of their pre-retirement income, the study calculates.
Between 73% to 76% of people will achieve 70% of pre-retirement income, according to the analysis.
Though opinions vary, a general rule of thumb is that workers need about 70% of pre-retirement income to live fairly comfortably in retirement.
The EBRI study covers people who are eligible for 401(k)s, not simply those who actually participate. But about 73% of workers with access to 401(k) plans take part in them, according to EBRI.
The ability to generate 60% to 70% 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.