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How much do your 401k plan participants need to accumulate in their accounts in order to retire without making significant lifestyle adjustments? Here are some estimates from the experts:

  • 8 times final pay at age 67 – Fidelity
  • 8 times final pay – USA Today
  • 9.4 times final pay at age 67 – Aon Hewitt
  • 10 times final pay – Frontline Special on PBS
  • 11 times final pay at age 65 – Aon Hewitt
  • 12 times final pay – T. Rowe Price
  • 13.5 times final pay at age 63 – Aon Hewitt
  • 18 times final pay – EBRI
  • 20 to 25 times final pay at age 65 – many financial advisors
  • 25 times final pay – to ensure an annual withdrawal rate of 4%

With such a wide range of opinions, it can be hard for participants to know what to aim for. Consider discussing the following retirement planning factors during your employee education sessions to help them locate their appropriate target:

Most Important Retirement Planning Factors


1. Lifestyle

For many, this will be this easiest of the retirement planning factors to adjust. The amount an individual needs in retirement is highly dependent upon the lifestyle that he/she intends to lead. It has become common to retire and not adjust standards of living. This expectation results in a higher final balance target.

2. Health and healthcare

This may be the most important of all the retirement planning factors because of the potential expense. Those employees who struggle with health issues now will likely struggle to an even greater extent in retirement. If healthcare expenses are expected to be high, a higher final balance should be targeted.

3. Longevity

Does long life run in their family? If so, suggest targeting a higher final balance.

4. Long-term care

Coupled with longevity is concern about the need for long-term care. Even if nursing home care is not necessary, assisted living or in-home care expenses will likely be incurred by all of us. If this is a concern, participants should target a higher balance.

5. Lack of family

Some individuals never had children and some may have moved away from their families and lost touch. If an individual can expect to be all by himself/herself, targeting a higher balance is probably wise.

How are most participants doing? Recent studies have found that 50% of workers are not on track to save enough to retire without reducing their standard of living. A study by Vanguard published in Time Magazine indicates that workers should save at least 12% to 15% of their income each year. It is likely that most of your participants are not saving anything near this amount.

Communicate these important retirement planning factors in your next employee education session so that your participants can make adjustments as soon as possible.


About the Author

Robert C. Lawton, AIF, CRPS is the founder and President of Lawton Retirement Plan Consultants, LLC. Mr. Lawton has over 30 years of retirement plan consulting and administration experience and has provided consulting services to many Fortune 500 companies including: Aon Hewitt, Apple Inc., AT&T, First Interstate Bank, Florida Power & Light, General Dynamics, Houghton Mifflin Harcourt, IBM, John Deere, Mazda Motor Car Company, Northwestern Mutual, Northern Trust Company, Trek Bikes, Tribune Company, Underwriters Labs and many others. Mr. Lawton may be contacted at (414) 828-4015 or

About Lawton Retirement Plan Consultants, LLC

Lawton Retirement Plan Consultants, LLC is a Milwaukee, Wisconsin-based independent, objective Registered Investment Advisory (RIA) firm providing investment advisory, fiduciary compliance, employee education, vendor management and plan design services to 401(k) plan sponsors. The firm currently has contracts in place to provide consulting services on more than $400 million in plan assets. For more information, please contact Robert C. Lawton at (414) 828-4015 or or visit the firm’s website at: Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser.

Important Disclosures

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance, tax, legal or investment advice. Each plan has unique requirements and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does Lawton Retirement Plan Consultants, LLC assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. Investors should carefully consider investment objectives, risks, charges and expenses. The statements in this publication are the opinions and beliefs of the commentator expressed when the commentary was made and are not intended to represent that person’s opinions and beliefs at any other time. The commentary does not necessarily reflect the opinion of Lawton Retirement Plan Consultants, LLC and should not be construed as recommendations or investment advice. Lawton Retirement Plan Consultants, LLC offers no tax, legal or accounting advice and any advice contained herein is not specific to any individual, entity or retirement plan, but rather general in nature and, therefore, should not be relied upon for specific investment situations. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser and accepts clients outside of Wisconsin based upon applicable state registration regulations and the “de minimus” exception.