A "Reality Check" for the Allstate Reality Check

November 19, 2003 (PLANSPONSOR.com) - The old adage, "if it looks too good to be true it probably is," can apparently also apply to retirement savings projections.

On November 12, 2003 , a report on the findings of Allstate’s Retirement Reality Check study (see Gen X Women Confident About Retirement ) indicated that the women of Generation X – those between the ages of 24 and 37 – have “earmarked” an average of $410,000 for retirement, a total Allstate said included pensions and other company-sponsored savings plans. By comparison Baby Boomer females – those between the ages of 38 and 57 – have an average nest egg of $451,000, even with an entire decade’s head start on their younger peers.

Both numbers were high relative to “common wisdom” – consider, by way of comparison, September 2003 data from the Employee Benefits Research Institute (EBRI) that said the average 401(k) account balance was only $57,668 across all segments of the investing population (see EBRI: Bears Merely Scratched 401(k) Balances ), but Allstate stood by the numbers as reported.

In follow-up calls to Allstate, spokeswomanRebecca Hirsch affirmed the numbers, and suggested we contact Harris Interactive, who conducted the poll for Allstate for a more specific breakdown of the survey demographics.

According to Nancy Wong, Public Relations Manager with Harris Interactive, the question posed to poll respondents was, “approximately how much do you have in accounts specifically for retirement including IRAs, 401ks, other types of defined contribution plans, such as 403(b)s and investments in taxable accounts.” The data given by the respondents in this case would have been closer to an aggregate retirement savings picture, rather than the narrower employer sponsored retirement plan picture painted by the Allstate release (see Not your mother’s retirement savings ).

Even then, however, the numbers trended higher than most industry estimates. Wong acknowledged that the Generation X women sample might not have been representative of the whole generation. “The sample for this group is about 100 people, of which there were a number that responded their savings were in the over $500,000 – and even over $1,000,000 range,” Wong told PLANSPONSOR.com.

To get a more accurate picture of the total savings for both Generation X women and Baby Boomer women, Wong said retirement fund watchers should turn their attention to the median numbers. In which case, Wong said Harris’ data shows total retirement savings – a number that includes savings in Individual Retirement Accounts (IRA), 401(k), 403(b), other defined contribution plans and taxable savings accounts – comes in at approximately $50,000 for the women of Generation X and $96,000 for female baby boomers. Numbers which, while still somewhat higher than the average balances typically bandied about (this appears to be a higher wage demographic, after all), are nonetheless well within sight of “normal.”

However, Allstate’s Hirsh says the median number should not take away from the overarching theme of the Allstate survey. “The overall essence of the release is that Generation X women are saving at a higher rate than the Baby Boomer women,” said Hirsch. “If I were a Baby Boomer woman, I would look at the generation below me and be taking notes.”