From CNBC: 2024-06-26 07:00:06

Americans are saving more in their 401(k) plans, thanks to stock market returns and automatic enrollment. However, the median 401(k) balance for retirees is still low, making Social Security a major component of retirement income.

Vanguard reports record-high participation and savings rates in 401(k) plans. Investors prefer equities and target-date funds, with minimal trading activity. While participation rates are up, account balances remain low for many participants, necessitating increased savings for a robust retirement.

Median 401(k) balances for retirees are still insufficient for a comfortable retirement. Despite higher income levels and savings rates for older participants, the median balance of $88,488 may not be enough. Additional sources of retirement income, such as Social Security and pensions, are essential for financial security in retirement.

Retirees face financial challenges with limited retirement savings. A budget analysis shows the importance of additional income sources beyond personal savings. Many retirees do not have tax-deferred retirement accounts or pensions, affecting their financial well-being.

To improve retirement security, Americans need to save more and maximize their 401(k) contributions. Investor education is crucial to help participants understand the benefits of saving the maximum amount allowed. Relying solely on the stock market for retirement security is risky, emphasizing the need for increased savings to ensure a stable financial future.

Read more: Your 401(k) is up, but a new report says Americans need to save more