Why are 401(k)/IRA balances substantially below potential?

Biggs, Andrew G., Alicia Haydock Munnell, and Anqui Chen. “Why are 401(k)/IRA balances substantially below potential?”. Issue in Brief 19-17, Chestnut Hill, Mass.: Center for Retirement Research at Boston College, November 2019. http://hdl.handle.net/2345/bc-ir:108631.
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Abstract

The brief's key findings are: (1) 401(k)s/IRAs have the potential to provide significant wealth. (2) But a typical 60-year-old with a 401(k) in 2016 had less than $100,000 compared to a potential $360,000 in combined 401(k)/IRA assets. (3) Four factors could explain this gap: the immaturity of the 401(k) system, the lack of universal coverage, leakages, and fees. (4) The analysis finds that the main culprits are the immature system and lack of coverage. (5) This story holds even if younger workers and those with traditional pensions are excluded. (6) Even after the 401(k) system is fully mature, a large gap between potential and actual assets is likely to persist.

Title
Why are 401(k)/IRA balances substantially below potential?
Author
Biggs, Andrew G.
Munnell, Alicia Haydock
Chen, Anqui
School
Carroll School of Management
Discipline
Finance
Center
Center for Retirement Research
Genre
report
Date Issued
November 2019
Publisher
Center for Retirement Research at Boston College
Series Title
Issue in Brief
Series Number
19-17
Persistent Link
http://hdl.handle.net/2345/bc-ir:108631
Use Restrictions
These materials are made available for use in research, teaching and private study, pursuant to U.S. Copyright Law. The user must assume full responsibility for any use of the materials, including but not limited to, infringement of copyright and publication rights of reproduced materials. Any materials used for academic research or otherwise should be fully credited with the source. The publisher or original authors may retain copyright to the materials.
Subject
Financing Retirement

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