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Above 'averages'

While the average 401(k) balance can, over time, provide a sense of the direction in which things are moving, it tells you very little about the adequacy of the overall average savings to fund an individual retirement.

By Nevin Adams | Updated on September 05, 2013

Every so often an industry survey will come out with an “average” 401(k) balance. The specific numbers vary, but they are consistently less than even the most optimistic would see as sufficient to provide a financially viable retirement.

Now, in fairness, the validity of an “average,” while mathematically simple, depends heavily on its components. Most are no more than the total of all the balances of those in a 401(k), from those just entering the workforce (and thus, by definition, with negligible balances) — and with decades to go to retirement — to those who are perhaps just days away from that point.

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