Study: Typical 401(k) Participant Can’t Retire Until Age 73

Most employees ages 45 to 55 will need to contribute 19% of pay to retire by age 65

By Stephen Miller Dec 7, 2010

Most U.S. employees will not be able to afford to retire by the age of 65, according to actuarial and employee benefits consultancy Nyhart's Fall 2010 401(k) Retirement Readiness Study.

The six-month study reviewed nearly 10,000 retirement accounts from employees at 110 U.S. public and private companies. The researchers evaluated how contributions to 401(k) plans, the primary retirement tool for most of these employees, would affect the age at which participants could retire. The key findings are summarized below.

Retirement Dates Further Off

In terms of extending the number of working years until retirement is affordable, the study found that:

81 percent of employees 18 or older will not be able to afford to retire by the age of 65.

70 percent of employees age 24 and younger are not expected to retire by age 65. One reason: 30 percent of these employees do not participate in a 401(k) plan.

The typical plan participant, relying on their 401(k) as a primary retirement vehicle, will not be able to retire until age 73.

Most employees currently ages 60 to 64 will likely need to work until the age of 75 to be able to afford to retire at their current level of contribution to their 401(k).

Insufficient Employee Contributions

The leading cause impacting employees’ ability to retire on time is their failure to contribute enough of their income toward retirement, the study found. Specifically:

Most employees older than 55 will need to contribute more than 45 percent of pay through the remainder of their career to retire by age 65.

Most employees ages 45 to 55 will need to contribute 19 percent of pay to retire by 65.

“Across all age groups and income levels, the employees who contribute the greatest percentage of income have the best opportunity for retirement,” said Thomas Totten, senior actuary and lead researcher for the study. “The decision of how much an employee contributes to their 401(k) far exceeds the importance of which investment funds they choose.” By increasing their contribution by just 2 percent to 4 percent of total income, “employees can shave years off the age they retire,” he added.

Recession Caused Setback

In addition, the study looked at the impact that the economic recession of 2008-10 has had on employees age 55 and older who may have expected to retire at age 65.

“Most employees were under-contributing before the recession,” said Craig Harrell, a senior retirement advisor and researcher for the study. “With this further dip in retirement balances, if you’re age 60 to 64, you have very little time to make up the losses recently incurred. Most employees in this age category will need to contribute as much as 45 percent of their income, or plan to work until they're in their mid-70s, to retire at the level they expected.”

Stephen Milleris an online editor/manager for SHRM.​

Job Finder

Find an HR Job Near You
Post a Job


Join us for the largest and best HR conference in the world, June 23-26, 2019 in Las Vegas.



Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 10,000 companies

Search & Connect