401(k) Balances are Woefully Small

According to the Investment Company Institute and the Employee Benefit Research Institute, on December 31, 2004 the average balance of 401(k) plan participants in their 60s was $136,400. The average balance for participants in their 50s was $129,218.

These amounts are meager considering that for many people their 401(k) plan is the alternative to more generous employer-funded defined benefit plans (like your grandfather's pension).

Moreover, the 2004 average balance of the 60s group has decreased from $143,161 in 1999, which reflected the bubble in stock prices. So many workers are worse off.

These data suggest that many 401(k) balances are woefully small and will not be enough to sustain the financial needs of many retirees.