Stock Market Boosts 401Ks But Most Americans Still Staring Into Retirement Abyss

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America’s retirement accounts have never looked so flush with cash and promising for workers, according to the financial advisers who profit off of America’s retirement accounts.

The average 401(k) retirement account managed by Fidelity Investments now holds a balance of $89,300, which is twice what Fidelity accounts averaged during the market lows of the recession, the Washington Post reported Monday. At Fidelity’s competitor Vanguard, accounts hold an average of $101,650, “the highest level since it began tracking the data in 1999.” The gains come on the strength of 2013’s stock market rebound, which made those wealthy enough to have investments in the markets substantially wealthier than they were before.

But the reports from Fidelity and Vanguard mean nothing to the majority of American workers who do not have retirement savings accounts. Nearly 40 percent of white working people have nothing saved for retirement, along with 62 percent of black working-age households and roughly seven out of every 10 latino ones who have no retirement savings. Almost two out of three working-age Americans are accumulating debt faster than they amass savings, and the gap between what Americans need to have saved for retirement and what they have actually set aside now stands at $6.6 trillion.

Yet even for those who hold a 401(k) account, it is no golden ticket to a financially secure dotage, and the news that stock market gains lifted the average account balance to new heights also spotlights the high-risk nature of a system dependent on investment gains. The shift from traditional pensions to individually managed retirement accounts in the 1980s subjected workers’ retirement security to a volatile and highly manipulated set of financial markets, reduced retirement income for about a quarter of all savers, and gave employers the ability to make arbitrary and costly changes to how they contribute to their employees’ retirements — if they even contribute at all. On top of all that, the fees charged by financial managers end up siphoning off a full third of all investment returns over a worker’s career.

The brokenness of America’s retirement savings system and the impending $6.6 trillion retirement crisis have policymakers scrounging for reform ideas to make sure retirement doesn’t become outright impossible for millions of people. There are several ideas on the table, ranging from modest changes to the current system of individual, managed, fee-ridden accounts to the public savings starter kit President Obama proposed in January to a simple expansion of Social Security. While the latter idea is treated as radical after years of fixation in Washington on how to cut Social Security, the actual policy change is relatively modest.