Retirement Savings Report Card
From The Wall Street Journal:
- Some 70% of private sector workers now have access to a 401(k) plan. Participation rates are rising as more companies implement automatic enrollment.
- Average 401(k) savings rates have risen from 13.5% in 2020 to 14.3% in the first three months of 2025. Financial planners often recommend that 15% of salary be saved for retirement, so the goal is in sight.
- During the market volatility following the announcement of tariffs, individuals bought a net $50 billion per month in stock purchases, while private equity funds shed $1 trillion.
From the Investment Company Institute’s 2025 Fact Book:
- Retirement plans held $44.1 trillion in assets as 2025 began.
- 401(k) plans held $17.0 trillion, and IRAs (including IRA rollovers) held $8.9 trillion.
- Public and private defined benefit (pension) plans held $12.2 trillion. Unfunded liabilities for pension plans came to 32% for state and local governments, 26% for the federal government. Private sector pension plans were 2% overfunded.
- Social Security benefits will replace 78% of pre-retirement income for the lowest income quintile of retirees, and the replacement rate is 31% for the highest quintile. Those in the middle will find that Social Security will replace 49% of their pre-retirement income.
- 401(k) plans have 70 million active participants. 91% are offered employer contributions, 84% have access to plan loans.
From The 2024 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds:
- 100% of Social Security benefits will be paid until 2033, when benefits will be reduced by 21%, under current economic and tax assumptions.
- The Hospital Insurance Trust Fund will pay 100% of benefits until 2035, five years later than in the year-earlier report. The improvement was attributed to lower than expected costs in 2023 and higher than expected payroll tax income.
All in all, a passing grade, but more needs to be done. One can never have too much savings for retirement.
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