Employees who don't make 401(k) contributions can expect to replace at least 52% of their pre-retirement income when they retire, well short of the average retiree's needs, according to a recent study from Hewitt Associates. Employees who don't contribute to their 401(k) plans may need to replace up to 125% of their salaries from other sources to meet their retirement and health care needs, Lori Lucas, director of participant research, said in a news release about the study.
In contrast, employees who do contribute to their company's 401(k) plan can expect to have 98% of their annual pre-retirement income through a combination of 401(k), pension and Social Security income.
Hewitt's study, "Total Retirement Income at Large Companies: The Real Deal," surveyed officials at 65 large companies that offer 401(k) plans with a total of 1.8 million employees about the adequacy of projected retirement income compared with actual savings patterns.
