Boomers’ retirement income? Are you kidding?
From CNN Money:
This week in Washington, D.C. government leaders, retirement experts and financial services executives are meeting to discuss what employers, lawmakers and workers themselves can do to help Americans be better prepared for retirement.
Overall, only about 60 percent of workers over 40 who are eligible to participate in their 401(k)s do, and the number of workers covered by a defined-benefit pension has steadily declined. Meanwhile, young workers have the lowest 401(k) participation rates of all workers under 65.
Congress is considering legislation that would encourage all employers to offer automatic enrollment in 401(k)s and set the default contribution rate at 3 percent of pay, increasing one percentage point every year until 6 percent of pay is reached.
The legislation would also encourage companies to offer a 50 percent matching contribution or contribute 2 percent of pay for all employees whether they contribute or not.
Of most immediate concern is the status of Baby Boomers, who are next in line to retire.
According to research from Fidelity Investments, Baby Boomers only have enough in savings and other income sources to replace 59 percent of their pre-retirement income. Of those with 401(k) accounts, the average account balance is just $80,000, and many typically save just $2,750 a year toward retirement.