How’s Your 401(k) Doing?

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The Great Recession took a big toll on 401(k) retirement plans. The chart below, from the Employee Benefit Research Institute, shows the general volatility of 401(k) accounts: they go up smartly during booms (1996-99, 2002-07) and plummet during busts (2000-02, 2007-08). The average account took a 30 percent hit when the housing bubble burst in 2008.

In general, average 401(k) account balances have grown fairly steadily over the past two decades. But 401(k)s have two big problems. The first is volatility. If you were 55 when the Great Recession hit, you’ve made up most of the losses from 2008 and your account balance is probably close to where it was in the mid-aughts. But if you turned 65 in 2008 and were planning to retire that year, you were screwed.

Second, account balances just aren’t very big. The chart below understates retirement readiness since it shows averages for all workers. The actual median account balance for workers in their sixties is in the neighborhood of $50,000 or so. But even that isn’t much: it provides an annual annuity of only a few thousand dollars. That’s nice to have, but it’s hardly a windfall.

Of course, one other thing to keep in mind is that less than half the population has a pension of any kind, and that’s always been true. Over the past three decades, defined-contribution plans like 401(k)s have grown while defined-benefit plans have mostly disappeared. But over that entire period, less than half of all private sector workers have had either kind of pension. For the rest, the big debate over pensions is strictly academic. They rely almost exclusively on Social Security and always have.

This is just one part of the retirement puzzle, of course. More on the bigger picture tomorrow.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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