NU Online News Service, June 28, 2004, 3:46 p.m. EDT
Some Americans who work for large U.S. companies could end up having to live on just 20% of their preretirement income when they retire.[@@]
When researchers at Hewitt Associates Inc., Lincolnshire, Ill., looked at income projections for 1 million employees at 62 large U.S. companies, they found that workers who contribute to 401(k) plans and get solid retiree health benefits and defined benefit pension benefits could end up replacing an average of 103% of their preretirement income when they retire.
But the researchers note that only 68% of large U.S. employers offer defined benefit pension plans and that many workers refuse to participate in 401(k) plans.
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The income replacement ratio might average about 80% for workers who contribute to 401(k) plans but have no defined benefit pension benefits, and the replacement ratio might average just 40% for workers who have no retirement plan benefits of any kind, the Hewitt researchers estimate.