Employees must be better educated about their retirement needs, as those who do not contribute to their 401(k)s can expect to replace as little as 52% of their annual pre-retirement income when they retire, an amount that is well below the average retiree's income needs. That is according to a recent study by Hewitt Associates of Lincolnshire, Ill., entitled, "Total Retirement Income at Large Companies: The Real Deal."

This is quite troubling, especially since most employees who do not contribute to their 401(k) plan will need to replace as much as 125% of their pre-retirement pay to be able to live comfortably upon retirement. Thus, for these employees, their retirement income might fall short by 73 percentage points. The study also established that nearly a third (30%) of 1.8 million employees at 65 large employers who took the survey do not contribute to their plan.

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