What's a More Typical 401(k) Balance: $12K or $86K?

Several readers asked how is it possible that the typical U.S. worker had an average balance of $86,513 in their 401(k) account at the end of 2008, based on data this week published by the Employee Benefits Research Institute and the Investment Company Institute.

Great question.

So let’s dig a bit deeper: I included in my post a link to the EBRI/ICI report. You’ll see that this research covers people who consistently held a 401(k) from 2003 to 2008 (Page 8 in the report).

And while the AVERAGE balance for those folks exceeded $80,000, their MEDIAN 401(k) account balance was $43,700 at yearend 2008.

But here is the number might make the most sense to readers: The median account balance for ALL 401(k) participants (based on a sample of six million plan participants in the database of 24 million) was a mere $12,655.

Do you think $12,655 is a more realistic account balance for the typical worker?

Why or why not?

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