An Update on 401(k) Plans: Insights From the 2007 SCF
The brief’s key findings are:
- The 2007 Survey of Consumer Finances shows 401(k)/IRA balances of $78,000 for those approaching retirement, a modest improvement over 2004.
- This progress was due to slightly higher participation rates, improved diversification, reduced leakage, and the maturation of 401(k)s.
- However, by October 2008, the stock market collapse had reduced 401(k)/IRA balances by about 30 percent – to just $56,000.
- In addition, companies have begun cutting their employer match, and hardship withdrawals – while still at low levels – have ticked up.
- The inadequacy of 401(k) balances suggests the need for a new tier of saving.