Despite the availability of retirement plans and the rally in financial markets, assets in 401(k) and IRA plans declined for many households between 2013 and 2016, according to a new report from the Center for Retirement Research (CRR) at Boston College, using data from the Federal Reserve’s Survey of Consumer Finances.
During that time frame, the median value of combined 401(k) and IRA assets fell almost 17% to $40,000 for households headed by someone age 35 to 44 and declined 3% to $97,000 where the head of household was between 45 and 54.
Households led by someone between 55 and 64, approaching retirement, were the exception. The median value of their combined 401(k) and IRA assets rose 24% to $135,000 during the same time frame, but even those savings are nowhere near enough.
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According to the CRR, the median working couple hoping to retire at 65 with an income that replaces 75% of their pre-retirement income need to have amassed assets equal to 8.5 times their income at age 60, but the $135,000 median they’ve saved is equivalent to just 2.5 times. It translates into a joint-and-survivor annuity of just $600 per month, which is not indexed for inflation and will lose purchasing power over time.