In its announcement, Fidelity said the average account balance for those age 59 as of the end of 2005 was $112,000. Combined with what older boomers, age 50 – 59, expect to receive from social security, pensions, and personal savings, Fidelity says the group is on track to replace 60% of their pre-retirement income. Fidelity recommends an 85% replacement rate.
“The 401(k) will be a vital source of income for older Boomers, but even factoring in that this group will likely reap greater pension and social security benefits than future generations, they still face a substantial income reduction in retirement,” said Jack Callahan, president of Fidelity Institutional Retirement Services Company, in the announcement.
Research from Fidelity’s Retirement Index shows 61% of older boomers expect to receive a pension to help supplement their retirement savings, compared with 42% of younger workers, born after the boomer generation. Additionally, Fidelity said, 50% of older boomers believe they will need to work in retirement to cover basic expenses, with 37% having to do so just to pay for health expenses.
Fidelity’s Web site is www.fidelity.com .