Posted by: Lauren Young on October 08, 2009
Several readers asked how is it possible that the typical U.S. worker had an average balance of $86,513 in their 401(k) account at the end of 2008, based on data this week published by the Employee Benefits Research Institute and the Investment Company Institute.
So let’s dig a bit deeper: I included in my post a link to the EBRI/ICI report. You’ll see that this research covers people who consistently held a 401(k) from 2003 to 2008 (Page 8 in the report).
And while the AVERAGE balance for those folks exceeded $80,000, their MEDIAN 401(k) account balance was $43,700 at yearend 2008.
But here is the number might make the most sense to readers: The median account balance for ALL 401(k) participants (based on a sample of six million plan participants in the database of 24 million) was a mere $12,655.
Do you think $12,655 is a more realistic account balance for the typical worker?
Why or why not?
Businessweek’s Emily Thornton, Amy Feldman, Ben Levisohn, and Ben Steverman focus on matters great and small for investors, from the views of a hot fund manager to an explanation of the latest products devised by Wall Street’s rocket scientists. Exploring trends in any area, from bonds and stocks to closed-end funds and futures, always with an eye towards giving investors a better understanding of the sometimes confusing and often chaotic world of finance. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.