Nevin's Data "Points"

   Last week, I shared a   list of things that make me “mad as hell”   — things that those in our industry generate, promote and often share as fact without any application of common sense, and no apparent appreciation for the damage done by their complicity in sharing such nonsense.  Here’s the rest of the list:  Reporting on average  —  well, anything (see  Why an Average 401(k) Balance Doesn't 'Mean' Much ) . You name it, if it involves numbers from widely varied sources, individuals, or different time periods, somebody in this industry will report it as an arithmetic average. This industry continues to insist on reporting average 401(k) balances, average fees, average estimates on retirement needs, and more recently “forgotten” average account balances. I get it. Averages are widely considered to be a middle of the pack assessment of reality. But that’s only true when you are averaging things that are similar, and more importantly real. I...

   There were some   good headlines   about 401(k)s last week — but the numbers underneath those “averages” were even better. Those headlines — reporting on  Fidelity’s Building Financial Futures: Q1 2025 report  — noted that savings rates hit a record high in Q1, driven by a milestone employee contribution rate of 9.5%, and an employer contribution rate of 4.8% — the highest level to date in that survey. Those types of increases have previously been noted in surveys by the Plan Sponsor Council of America, but this one commented that the combined savings rate of 14.3% is the closest it’s ever been to Fidelity's suggested savings rate of 15%.  That said, when you look inside those averages — Fidelity noted that Boomers [i]  actually had a total savings rate of 17.2%, buoyed by a  12%  employee savings rate, while Gen Xers had a 15.4% total savings rate (a  10.3%  employee savings rate). Gen Z’s 7.3% employee savings rate and Mil...

A recent headline screamed that 401(k) savings rates have “stagnated” – but that’s missing the point. Several of them, actually. “Stagnated” in this case apparently means that the average savings rate in 2018 — both employee and employer contributions — was 10.6%, roughly the same as the 10.4% rate reported in the survey in 2004. The point seems to be that, despite roughly a decade of automatic enrollment and other plan design enhancements, Americans aren’t saving any more. That’s a perfectly obvious point to draw from those two datapoints – in this case from the recent 2019 How America Saves report from Vanguard which, while it only covers plans recordkept by Vanguard, the experience of 1,900 plans and 5 million participants in the survey always provides some interesting insights. First a couple of basics; what do you suppose the odds are that we have the same plans (and participants) in the 2004 and 2019 surveys? Exactly. So, while it may not be apples to or...