60% Of 401(k) Participants Accumulated More Debt Than Retirement Savings

According to a recent article in Zero Hedge, 60% of 401 (k) participants accumulated more debt than retirement savings between 2010 and 2011.  This is even with the average plan participant deferring 8% of their annual income through their 401 (k) plan and Social Security taxes.  This 8% combined contribution makes retirement savings one of the largest budget items for households.

However a recent study done by HelloWallet indicates retirement readiness remains stubbornly low:  the typical worker near retirement only has about 2 years of replacement income saved, or about 15 years short of the median lifespan post-retirement.  These numbers are staggering:

HelloWallet Retirement Chart

One explanation for the stubbornly low retirement readiness of workers may be an increase in household debt. With more household income going to pay off debt, households may have less money to save and face higher costs of living in retirement.  In fact, over 60% of workers accumulated more debt than they contributed to retirement savings between 2010 and 2011.


The study, which analyzed consumer finance data from the Federal Reserve and the U.S. Census Bureau, underscores the need for retirement plan sponsors to provide participants with holistic, independent financial guidance. Without that support, increases in 401(k) and other DC (Defined Contribution) account balances will be off-set by growing liabilities on the other side of a participant’s ledger.

At Financial Freedom Planners we have tools, resources, and solutions to help you with your financial journey.  For example we have a Cash Flow Questionnaire in various formats to make it easy for you to develop a budget.  In addition, as a member of the Garrett Planning Network, we are thought leaders and contributors to Dimespring.  Dimespring is an interactive community for people seeking actionable financial advice.  It is fueled by content that inspires action, and tools that activate positive financial change. Dimespring educates, entertains and helps you make better-informed personal finance decisions.

Give us a call or email us for a complimentary “Get Acquainted Meeting” today!

Remember: “It doesn’t take a fortune to build one.”


About Charles Roberts, CFP®

Founder & CEO, Financial Freedom Planners™
This entry was posted in Financial Planning, Retirement Planning and tagged , , , , , , . Bookmark the permalink.

One Response to 60% Of 401(k) Participants Accumulated More Debt Than Retirement Savings

  1. Pingback: 71% of Middle-Income People Don’t Have a Written Retirement Plan | Financial Freedom Planners

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