Large 401(k) balances skew the average balance, making it much bigger than the median. Image: Pedal to the Stock/Shutterstock.com
By: John Grobe, Federal Career ExpertsThose of you who watch Family Feud are used to hearing the phrase “Survey says…”. This article has some results of surveys regarding retirement, especially retirement savings. Let’s see what the survey says.
Survey says – The average 401(k) balance at the end of 2022 was just a whisker under $104,000 according to Fidelity Investments. But another survey says – The median 401(k) balance is only $39,000 according to nerdwallet.
Why the difference? Large 401(k) balances skew the average balance, making it much bigger than the median. For those of us who have forgotten our statistics, one arrives at an average by adding up all the individual values and dividing the result by the number of observations. On the other hand, the median is derived by taking the middle value (the value for which half the observations are higher, and half are lower).
When it comes to IRAs, survey (once again, Fidelity) says the average balance is exactly $104,000 and the other survey (once again, nerdwallet) says that the median balance is $65,000.
Survey says – Less than half (44%) of workers anticipate that money from Social Security, pensions, and other guaranteed income streams will cover even their basic cost of living. This survey, from the Life Insurance Marketing and Research Association also says that fewer than 25% of workers under 50 will have a pension when they retire.
How are you doing compared with the results of these surveys. If I had to guess, I would think that you were doing better. If I’m right, pat yourself on the back for your diligence in setting aside money in the TSP and outside IRAs, and thank your lucky stars that you are working for an employes (props to Uncle Sam) that still provides workers with a pension.
There were a lot of other interesting statistics that came out recently, some from surveys, and some from data. Here are a few.
• From the TSP. The participation rate in the new “mutual fund window” is 0.036%. It’s not starting off like a house on fire.
• From the Center for Retirement Research at Boston College. Older (60+) borrowers are less likely to be approved for a re-finance of an existing mortgage. Surprised? I think not.
• Also from the Center for Retirement Research. As of 2019 (the latest numbers available) nearly half of employees who participate in flexible spending accounts forfeited money at the end of the year (including grace period). The average worker contributed $1,179 and forfeited $339. The median amount forfeited, however, was less – $157.
Data can be fun. But it can be sobering as well.
How Not to Lose Your Federal Insurance at Retirement
Report Describes Background, Impact of ‘Offset’ and ‘Windfall’ Provisions
TSP Funds Surge Higher in February
What TSP Millionaires Do That Others Don’t
Biggest Social Security Myths That Federal Employees Fall For
The 1st Year of Retirement Can be Rough; Do These 3 Things to Prepare
