It hasn’t worked out that way. The median balance in 401(k) and individual retirement accounts for households headed by people ages 55 to 64 who had accounts at work was just $120,000 in 2010, according to the Center for Retirement Research at Boston College.

Those savings will provide only $4,800 a year, assuming seniors withdraw 4 percent annually, the amount recommended by retirement benefits experts to ensure retirees don’t run out of money in their lifetimes. Financial planners say that retirees need savings of at least 10 times their annual income to live comfortably.

Cost Savings

Companies that adopted 401(k) plans have realized they can adjust them, tinkering with the plumbing and, in the process, costing workers millions in retirement savings. What’s more, contributions aren’t mandatory as they generally are in traditional pensions. Since 401(k) contributions are measured as a percentage of payroll, the savings from any cuts are realized immediately. Some employers are changing what they offer to lower their own expenses and improve profits.

That’s what AOL Inc. tried last week when Chief Executive Officer Tim Armstrong announced the company would make 401(k) payments in one lump sum after the end of the year. When he blamed the change on spiraling health-care costs, including $2 million spent on care for “distressed babies” and the higher cost of benefits under President Barack Obama’s Affordable Care Act, employees cried foul. Within days, Armstrong apologized and AOL reversed its decision.

Delayed Contributions

The tiff at AOL provides a window into a growing practice among companies of quietly scaling back retirement contributions, according to documents reviewed by Bloomberg. Many companies, including some major U.S. banks that sell investments to retirement plans, now delay their contributions to their employees’ 401(k)s until early the following year, paid in one lump sum rather than through regular payroll checks. Those changes depress employees’ compounded returns. And employees at some companies who change jobs before the end of the year wind up leaving company matches on the table.

“It’s starting to feel like déjà vu at the start of the Great Recession,” said Marcia Wagner, president of the Wagner Law Group, who specializes in employee benefits. “Right now employers are looking at cost savings and they are definitely looking at their 401(k) plans.”

The corporate cutbacks are adding to employees’ financial anxieties at a time when incomes are stagnant and even those earning low-six-figure incomes aren’t accumulating enough retirement savings. A generation since the shift from company- funded pensions to mostly employee-funded 401(k) accounts, half of baby boomers aged 50 to 64 don’t think they’ll ever have enough to retire, according to a 2011 survey by the AARP.

Wide Variations