Catching up on Your Retirement Planning

January 18, 2006

Did you know that the median 401(k) balance for those aged 50 – 59 is $53,400? Median means that $53,400 is the midpoint. Half have more and half have less than $53,400. That’s pretty sad if you ask me. Mindy Fetterman at USA Today has written a piece titled Facing Woes In Retirement? Catch-up Moves Can Help detailing some options available to those who are 50 and older.

For 2006, most people over 50 can contribute up $20,000 to their 401(k) plan ($15,000 standard contribution + $5,000 catch-up contribution). Of course you need to check with your company’s human resources department to make sure your plan doesn’t have lower limits. Remember that these catch-up provisions may end if Congress doesn’t extend them past 2010. I can’t imagine that Congress won’t extend them but you should at least be taking advantage of them while you know they are there.

My advice for those over 50 is to not lose heart. Save as much as you can. Don’t let your lack of savings keep you from saving more. Every little bit helps.

5 responses to Catching up on Your Retirement Planning

  1. Wow. That is sort of staggering, but I suppose many of those folks thought pensions might take care of them in retirement? (looking for a reason to not be totally freaked out by that statistic…)

  2. One question: like most people who work in startups, I’ve never worked in any one company for more than a few years, and my 401K is currently about this amount. But my rollover IRA has about $100K in it, so my money available from 401Ks over my lifetime is more like $160K. Does this study include rollover IRAs, or does it assume that you have only had a single 401K that you roll over from one company to another (always a rather dumb idea given the crappy choices available in most 401K plans).

  3. Below is a quote from the article. I’m assuming this takes into account rollovers. Thought it still seems very low for the age range.

    “Even the average saved — which is overweighted by people who’ve saved a lot — is just $115,260 for that age group.”

  4. The numbers don’t lie – people just aren’t prepared. And even those with money and kids are more likely to put the needs of their kids/saving for college first. One can take out a loan for college, but no one will loan you money for your retirement…

  5. Suddenly I don’t feel so inadequate! This is really sad. My 56 yr. old mother would fall into this category. I don’t think she has a penny saved, and she doesn’t have any job skills either (I don’t get it, a SAHM at 56!?!!!). I wonder how much divorce plays into this statistic? I know quite a few 50 somethings that have divorced recently, totally demolishing 20+ years of married savings and having to split an already measly retirement account.