Baby boomers could be in for a shock. Although they're the age group closest to retirement, according to a study of 401(k) participants by Natixis Global Asset Management, 33% of them have put away less than $50,000 for the big day, even though they said they'll need a 401(k) balance of $805,000 to cover living expenses in retirement.
On average, boomers have saved $258,898, only about a third of what they'll need. Millennials — who appear to be underestimating their retirement financial needs because of their age, believing the magic number to be $822,000 — have already done better than that. They've got an average of $91,215 in their retirement plans and years of saving ahead.
Gen X (ages 34-47) isn't doing a whole lot better than boomers, although they seem to have more realistic expectations than millenials do of how much they'll need. Their goal is just more than $1 million, while they've saved an average of $203,801. Of course, Gen X has more time than boomers do, but their target is higher.
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"Investors of all ages should take a second look at how much they save and what their needs are likely to be when they retire," said John Hailer, CEO of Natixis Global Asset Management in the Americas and Asia. "While many workers get it right, others might ask if their investing targets will get the job done. Too many seem to be setting the bar too low because they may lack access to the proper tools, education and guidance."
On the subject of tools, most participants don't use them. While 64% say their plans have retirement calculators, only 38% have ever given it a shot; 53% say their plans offer personalized benchmarks, while only 23% have tried it; and 59% say their plan provides a dollar amount showing current income that savings would produce in retirement, but only 37% have used it.
Some good news: the chief motivator to get employees to participate is the employer match (48%). Ninety percent of survey respondents eligible to participate in a 401(k) are doing so, and 93% have recently increased their contributions; 72% say they have never missed a contribution.
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