The nearly 80 million baby boomers in the U.S. could face financial problems as they approach retirement because many haven’t put aside enough in 401(k) plans, according to The Week.
The average 401(k) account balance is a little more than $60,000 and more than a third have saved less than $25,000, according to The Week. More than half of employees in the U.S. have no retirement savings plan.
"It has already become clear that 401(k)s have failed millions of Americans." Karen Friedman, executive vice president and policy director of the Pension Rights Center in Washington, D.C., told The Week.
Experts are saying the solution to the problem is higher contributions.
Vanguard, a major 401(k) administrator, told The Week that employees should contribute 12 to 15 percent of their incomes towards retirement to sustain a retirement for 20 years.
But that’s only if employees start young.
A person starting a retirement fund at 35 who earns $43,000 needs to contibute $10,000 a year to continue his or her lifestyle after 65, The Center for Retirement Research told The Week.
"The baby boomers will be the first generation that will do worse in retirement than their parents," Teresa Ghilarducci, a retirement specialist at the New School in New York, told The Week.
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