Reality Checks: A Comparative Analysis of Future Benefits from Private-Sector, Voluntary-Enrollment 401(k) Plans vs. Stylized, Final-Average-Pay Defined Benefit and Cash Balance Plans
Which type of retirement plan is likely to produce more money for retirement: A voluntary-enrollment 401(k), a traditional final-average defined benefit plan, or one of the newer cash balance plans? A detailed analysis by EBRI finds there is no single answer because a multitude of factors affect the ultimate outcome: interest rates and investment returns; the level and length of participation; an individual’s age, job tenure, and remaining length of time in the work force; and the purchase price of an annuity, among other things.