If you are reading this right now, the chances are good that your 401k balance has taken a beating. The Vanguard Group, one of leading 401k providers in the United States, offers a wonderful publication called “How America Saves 2022,” and it is filled with excellent data about everything from average 401k balances by age, to contribution amounts. It also discusses both the mean and median amount, employer matches and a lot more.
There is only one problem, even though the title of Vanguard’s publication is How America Saves 2022, it is in fact only current as of December 31, 2021.
In an ordinary year this would be no problem, the balances on 31 December would be “there or thereabout,” but 2022 is no ordinary year, and we have seen a dramatic deterioration in both the stock and the bond market.
This one-two-punch affects retirees as much as it does those who are working because there is nowhere to hide. You can’t move funds out of equity and into fixed income products like bonds and money market funds because rising interest rates means that once the purchase of those instruments is made by the fund, they start to lose value because “the market” is offering a higher yield elsewhere as interest rates rise.
Add to that the already painful purchasing power cost of inflation, and the rest is history.
This video discusses the “average value” of a 401k of a 60-year-old as measured by both the mean and median amounts. It discusses what adjustments were made to arrive at the June 2022 levels and importantly it gives you a benchmark so that you know where you stand relative to others.
One Response
I truly enjoy listening to Geoff’s take on various topics and issues. His delivery and stylistics make for an absolutely believable and must listen to person. Thank you very much for all that you do. Are there a list of Certified Financial Planners that you will like to recommend ?If such list does exist, this will be extremely helpful for do-it-yourselfers like myself .