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Too Many Are Saving Like There's No Tomorrow

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The good news is that 80 percent of people eligible to do so are putting money into their 401(k) plans. The bad news: they aren't putting in very much. While noting that the average balance is a "respectable" $47,000, an analysis by U.S. News & World Report adds that "half of all participants in 401(k) plans have $13,000 or less in their kitty." Is that because people have their vast personal fortunes invested elsewhere? Alas, no. Sixty percent of those with money in a 401(k) "have no other investments earmarked for retirement." Nor do people treat their 401(k) as sacrosanct. "More than two-thirds of workers who change jobs cash out their accounts rather than roll them into other plans." (Note to financial-services advertisers: Your commercials about rolling over such funds must not be very compelling.) In short, one gets the impression that many Americans think of retirement savings the way they think of inoculations: If you've done it at some point in your life, you're covered. People can think of themselves as "savers" even if they're saving a pittance. One further problem: People tend to have too much of their 401(k) invested in their employer's stock. Among people in their 40s and 50s, more than half of this money is in such stock. Meanwhile, a separate study by Charles Schwab & Co. (as summarized in USA Weekend) finds women more likely than men to say a "looming retirement" will motivate them to start saving. One piece of good news: Gen X women began investing at age 23, on average, while female seniors didn't start until they hit 45. Pictor International/Picture Quest