How Much Difference Can a 401(k) Make?

A new survey finds that the median retirement savings for those who have access to a 401(k) plan is nearly nine times that of those who don’t.

According to the 2016 Wells Fargo Retirement Study, those who have access to a 401(k) plan have a median savings of $87,000, compared with $10,000 for those without access. Accumulation goals also differ. These respective groups estimate needing a median of $750,000 vs. $500,000 for retirement, according to the survey.

Those who have saved consistently for retirement since starting their career (about a third of the respondents) have saved a median of $150,000 for retirement, compared with $20,000 median retirement savings of those who have not been consistent. Besides the difference in amount saved, there is also a significant difference in the age at which consistent savers started saving (25) versus those who haven’t been consistent savers (33). Access to a 401(k) plan may have played a role in the savings patterns and balances, as consistent savers also had access to a 401(k)-type plan at a greater rate (70% vs. 51%).

Retirement Expectations

Half of today’s workers expect they will need to work until at least 70 because they will not have enough savings to live comfortably in their retirement years. However, among consistent savers, only 35% expect they will work until at least 70, compared to 59% of those who are not consistent savers.

Though the study’s findings demonstrate the positive impact 401(k)-type plans have on retirement savings for workers with access to them, 58% of those who have a 401(k) plan available would still like more help to make sure they’re making the best investment choices for their retirement.

Seventy-three percent of workers indicate they wouldn’t have saved as much for retirement if they didn’t have a 401(k) plan or would have saved more for retirement if they had a 401(k) plan; 71% of retirees feel the same way.

Among workers who do not have access to a 401(k) plan, two-thirds (66%) believe they would save for retirement if they had access to a 401(k). This attitude is most prevalent among workers in their thirties, with 79% agreeing.

The survey was conducted on behalf of Wells Fargo by Harris Poll, which conducted a total of 1,253 telephone interviews between July 13 and Aug. 19, 2016, with 1,003 workers age 30 or older who are currently employed, and with 250 retirees.

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