Pity those poor Goldman Sachs (NYSE:GS) employees. Despite the popular notion that riches are lavished on them, workers at Wall Street's leading investment bank have only 86% of the assets they will need to maintain their lifestyles in retirement. At Citigroup (NYSE:C), things are even worse, with workers there having only 63% of what they'll need. United Airlines' pilots, by contrast, have more than double what they'll require to make their golden years truly golden.

The 401(k) Fee Fiasco
How To Avoid Costly IRA Mistakes
Caterpillar Suit Could Lower 401(k) Fees

Those are some of the findings of a retirement readiness index being released Monday by Fiduciary Benchmarks, a firm that benchmarks retirement plans, such as 401(k)s, and compares them with plans offered elsewhere.

For its study, the Kansas City, Mo., firm looked at 21,000 corporate retirement plans in 100 industries, each with a minimum of $10 million in assets.

Among the surprising findings: In terms of maintaining lifestyles in retirement, workers in the food industry may be in better shape than investment bankers. Employees at Kraft Foods (NYSE:KFT) on average have 118% of what they'll need to maintain their pre-retirement lifestyles after quitting work, and those at ConAgra Foods (NYSE:CAG) have 134%.

"If you don't know what your readiness is, here's a good starting point," says Tom Kmak, chief executive officer of Fiduciary Benchmarks.

To determine whether a person is ready to retire, the company constructed a Replacement Ratio Study based on work by benefits consultant Aon Consulting (NYSE:AOC) and Georgia State University. The amount needed in retirement varies from 94% of income for someone earning $20,000 a year just prior to retiring to 77% of income for someone earning $80,000. Someone with annual pre-retirement income of $250,000 will need 88% of that amount annually after quitting work to maintain his living standard, under a methodology developed by Aon. The ratios were calculated by factoring in gross pre-retirement income and for pre-retirement taxes, savings, estimated changes in expenditures at retirement and post-retirement taxes.

Because the study's objective was to gauge readiness to maintain pre-retirement standards of living, the absolute amounts that workers in various industries have saved, and will have available in retirement, vary widely.

One of the key factors in determining whether an industry's employees will be prepared to maintain standards of living in retirement are its profit margins, Kmak says. The reason is that businesses with higher profit margins tend to make higher contributions to employer retirement plans.

Kmak cautions that the study's findings should be viewed as a starting point. People working in transportation equipment management companies, such as Rolls Royce North America (OTC:RYCEY), are on average 98% ready for retirement, while employees at hospital companies are only 73% ready, according to Fiduciary Benchmarks.

This doesn't mean a longtime nurse should quit and move into the transportation business. Rather, it means the nurses should evaluate their retirement readiness and make changes as needed, Kmak said. Among the ways to improve retirement readiness are to delay retirement and contribute more to retirement plans, such as company-sponsored 401(k)s and Individual Retirement Accounts.

What's more, workers in the same industry sometimes show wide gaps in retirement readiness. Pilots at UAL Corp.'s United Airlines, for example, have an average of 219% of what they'll need to retire comfortably, while their flight attendant colleagues have only 79%, the study found.

Related Articles
  1. Retirement

    What's a 401(a) Plan?

    A 401(a) plan is a type of money-purchase retirement plan set up by an employer.
  2. Investing

    Build a Retirement Portfolio for a Different World

    When it comes to retirement rules of thumb, the financial industry is experiencing new guidelines and the new rules for navigating retirement.
  3. Investing

    Automating Your 401(k) is Easier Than You Think

    If you like automation, you should check out these features that many 401(k) plans offer.
  4. Retirement

    What's a Defined Contribution Plan?

    A defined contribution plan is a company retirement plan that specifies the amount of money contributed to it.
  5. Retirement

    Infographic: How Much Money Do You Need to Retire in Hawaii?

    In this infographic we break down cost of living in Honolulu, Hawaii in terms of taxes, rent, food and other expenses and offer comparison to the cost of living in New York, Los Angeles, San ...
  6. Investing News

    Canada in Recession

    On September 1, 2015, Statistics Canada reported that the economy has contracted by 0.5% in Q2 2015, after falling 0.8% in previous quarter.
  7. Term

    What are Pension Funds?

    A pension fund is a company-sponsored fund that provides income for employees in retirement.
  8. Economics

    Is a Recession Coming?

    In the space of a week, the VIX Index, a measure of market volatility, spiked from 13, suggesting extreme complacency, to over 50, evidencing total panic.
  9. Retirement

    Overhaul Social Security to Fix Retirement Shortfall

    There are several theories and ideas about how we can make up for the $6.6 trillion retirement savings shortfall in America. Adjustments to Social Security and our retirement savings plans are ...
  10. Investing News

    How Does US Social Security Measure Up Abroad?

    Social Security is a hotly debated topic. After examining the retirement plans of three different countries, the U.S.'s does not come out the winner.
RELATED TERMS
  1. Dynamic Updating

    A method of determining how much to withdraw from retirement ...
  2. Possibility Of Failure (POF) Rates

    The likelihood that a retiree will run out of money prematurely ...
  3. Safe Withdrawal Rate (SWR) Method

    A method to determine how much retirees can withdraw from their ...
  4. The New Deal

    A series of domestic programs designed to help the United States ...
  5. Mandatory Distribution

    The amount an individual must withdraw from certain types of ...
  6. Auto Enrollment Plan

    An employer’s decision to sign employees up to have a percentage ...
RELATED FAQS
  1. Are spousal Social Security benefits taxable?

    Your spousal Social Security benefits may be taxable, depending on your total household income for the year. About one-third ... Read Full Answer >>
  2. What are the best ways to sell an annuity?

    The best ways to sell an annuity are to locate buyers from insurance agents or companies that specialize in connecting buyers ... Read Full Answer >>
  3. Are spousal Social Security benefits retroactive?

    Spousal Social Security benefits are retroactive. These benefits are quite complicated, and anyone in this type of situation ... Read Full Answer >>
  4. Why are IRA, Roth IRAs and 401(k) contributions limited?

    Contributions to IRA, Roth IRA, 401(k) and other retirement savings plans are limited by the IRS to prevent the very wealthy ... Read Full Answer >>
  5. How do you calculate penalties on an IRA or Roth IRA early withdrawal?

    With a few exceptions, early withdrawals from traditional or Roth IRAs generally incur a tax penalty equal to 10% of the ... Read Full Answer >>
  6. What is the Social Security administration responsible for?

    The main responsibility of the U.S. Social Security Administration, or SSA, is overseeing the country's Social Security program. ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!