Underfunded 401 (k)s Threaten Retirement Dreams

Today's workers are struggling to pay their day-to-day expenses, so it's no surprise even fewer are successfully squirreling away money for the future. And recent research from Deloitte Consulting LLP., shows that most 401 (k)-planning professionals say employees aren't planning ahead and adequately preparing themselves financially for their golden years. Many don't save enough; others started saving too late. "Americans have not been saving and investing enough for retirement," says Stacy Sandler, a principal at Deloitte. "Rising healthcare costs and dropping 401(k) balances have taken their toll on employees. Those factors, combined with record levels of personal debt, high unemployment and low levels of personal savings, continue to paint a highly concerning picture of retirement readiness." On the positive side, overall participation in retirement savings programs is strong, so once the economy turns around many will be in a strong position to begin saving. An estimated 430 retirement-plan professionals took part in the research. For more about the survey, click here.

• Underfunded 401 (k)s Threaten Retirement Dreams

  

  40% of 401(k) balances are under $50,000.

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  Less than half of those surveyed say their 401(k) participant balances have returned to pre-2008 levels.

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  70% of survey respondents say the average age range of participants is between 41 and 50 years old – considered by experts as a late age to start contributing.

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  84% of these executives say only "some" or "very few" employees will be financially prepared for retirement.

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  49% of these professionals offer features that automatically increase participants' contribution levels.

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  64% of plan sponsors say fewer than 10% of participants take advantage of automated increase opportunities.

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  47% of all plans now include tax-friendly ROTH savings options.

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  86% of plan sponsors say less than 10% of participants take advantage of ROTH options.

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  Just 15% of plan sponsors say less than half of their employees participate in the 401(k) plan.

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  Only 8% of survey respondents say that 401(k) participants have lost faith in saving for retirement.