A 401(k) can be a valuable part of a retirement savings plan. But how much should you have saved in your 401(k) at different ages or career stages?
Charting the average 401(k) balance by age can help put your own savings in perspective. Seeing what others are saving in their 20s, 30s, 40s, and beyond can be a useful way to gauge whether you’re on track with your own retirement plans and what else you can do to maximize this critical, tax-deferred form of savings.
Keep reading to learn about these possible benchmarks and smart ways to handle common savings challenges people may face at different phases of life. After all, the point isn’t to see whether you measure up but to ensure you keep progressing toward your retirement goals.
Table of Contents
- Average 401(k) Balance: Overview
- Average 401(k) Balance: Ages 35 and Younger
- Average 401(k) Balance: Ages 35 to 44
- Average 401(k) Balance: Ages 45 – 54
- Average 401(k) Balance: Ages 55 to 64
- Average 401(k) Balance: Ages 65 and Older
- 401(k) Savings Potential by Age
- Tips on Improving Your 401k Return
- Creating or Reassessing Your Retirement Goals
- Improving Your Retirement Readiness
Average 401(k) Balance by Age Group
Pinning down the average 401(k) account balance can be challenging, as only a handful of sources collect information on retirement accounts, and they each have their own methods for doing so.
Vanguard is one of the largest 401(k) providers in the U.S., with nearly 5 million participants. For this review of the average 401(k) balance by age, we’ll use data from Vanguard’s “How America Saves 2022” report . Specifically, we’ll look at the average and median 401(k) balances by age for savers in 2021.
Why look at the average balance amounts, as well as the median? Because there are people who save very little as well as those who have built up very substantial balances, the average account balance only tells part of the story. Comparing the average with the median amount — the number in the middle of the savings curve — provides a bit of a reality check as to how other retirement savers in your cohort may be doing.
| Age Group | Average 401(k) Balance | Median 401(k) Balance |
|---|---|---|
| Under 25 | $6,264 | $1,786 |
| 25-34 | $37,211 | $14,068 |
| 35-44 | $97,020 | $36,117 |
| 45-54 | $179,200 | $61,530 |
| 55-64 | $256,244 | $89,716 |
| 65+ | $279,997 | $87,725 |
| Source: Vanguard | ||
Ages 35 and Younger
The average 401(k) balance for savers 35 and younger can be split into two groups:
• Under age 25: $6,264
• Ages 25 to 34: $37,211
Median 401(k) balances for both age groups are lower. The median balance is a dividing point, with half of savers having more than that amount saved for retirement in their 401(k) and the other half having less.
It makes sense that the under 25 group would have the lowest balances in their 401(k) overall, as they’ve had the least time to save for retirement. They’re also more likely to earn lower starting salaries versus workers who may have been on the job for 5 to 10 years. The youngest workers may not have as much income to put towards a 401(k).
Key Challenge for Savers
Debt often presents a big challenge for younger savers, many of whom may still be paying down student loan debt or who may have credit card debt (in some cases, both). How do you save for retirement when you want to pay off debt ASAP?
It’s a familiar dilemma, but not an insurmountable one. While being debt-free is a priority, it’s also crucial at this age to establish the habit of saving — even if you’re not saving a lot. The point is to save steadily (e.g., on a biweekly or monthly schedule) and, whenever possible, to automate your savings.
Then, when your debt is paid off, you can shift some or all of those payments to your savings by upping your retirement contribution.
Ages 35 to 44
• Average 401(k) balance: $97,020
• Median 401(k) balance: $36,117
The average 401(k) balance for workers in the 35 to 44-year-old group is $97,020. The median 401(k) balance for these workers is $36,117. That’s quite a gap! So what is a good average balance to have in your 401(k) by this point?
One rule of thumb suggests having three times your annual salary saved for retirement by the time you reach your 40s. So, if you’re making $100,000 annually, ideally, you should have $300,000 invested in your 401(k). This assumes that you’re earning a higher income at this point in life, and you can contribute more to your plan because you’ve paid off student loans or other debts.
Key Challenge for Savers
While it’s true that being in your late 30s and early 40s can be a time when salaries range higher — it’s also typically a phase of life when there are many demands on your money. You might be buying a home, raising a family, investing in a business — and it can feel more important to focus on the ‘now’ rather than the future.
The good news is that most 401(k) plans offer automatic contributions and the opportunity to increase those contributions each year automatically. Even a 1% increase in savings each year can add up over time. Take advantage of this feature if your plan offers it.
Ages 45 to 54
• Average 401(k) balance: $179,200
• Median 401(k) balance: $61,530
Among 45 to 54-year-olds, the average 401(k) balance is $179,200, while the median balance is $61,530.
The rule of thumb for this age suggests that you stash away six times your salary by age 50. So again, if you make $100,000 a year, you should have $600,000 in your 401(k) by your 50th birthday. Whether this is doable can depend on your income, 401(k) deferral rate, and overall financial situation.
Key Challenge for Savers
For some savers, these are peak earning years. But children’s college costs and the need to help aging or ailing parents are among the challenges savers can face at this stage. The great news is that starting at age 50, the IRS allows you to start making catch-up contributions. For 2022, the regular 401(k) contribution limit is $20,500 – but add in $6,500 in catch-up contributions, and you can save $27,000 annually in a 401(k).
While you may feel strapped, this could be the perfect moment to renew your commitment to retirement savings because you can save so much more.
Ages 55 to 64
• Average 401(k) balance: $256,244
• Median 401(k) balance: $89,716
The average 401(k) balance among 55 to 64-year-olds is $256,244. The median balance is much lower, at $89,716.
By this stage, experts typically suggest having eight times your annual salary saved. So going back to the $100,000 annual salary example from earlier, you’d need to have $800,000 tucked away for retirement by age 60.
Key Challenge for Savers
As retirement draws closer, it can be tempting to consider dipping into Social Security. At age 62, you can begin claiming Social Security retirement benefits to supplement money in your 401(k). But starting at 62 gives you a lower monthly payout — for the rest of your life. Waiting until the full retirement age, which is 66 or 67 for most people, will allow you to collect a higher benefit. And if you can wait until age 70 to take Social Security, that can increase your benefit amount by 32% versus taking it at 66.
Ages 65 and Older
• Average 401(k) balance: $279,997
• Median 401(k) balance: $87,725
The average 401(k) balance for those 65 and older is $279,997. The median balance is $87,725. So, is nearly $280,000 enough to retire, assuming you’re fully vested in your 401(k)?
Most experts would say no, unless you have other resources set aside for retirement. A pension plan, for example, or an Individual Retirement Account (IRA) could supplement your 401(k) savings. Investing in an annuity is also an option worth considering if you’re interested in creating a guaranteed income stream for retirement.
Key Challenge for Savers
Just because you turn 65, a common shorthand for “retiree,” doesn’t mean you’re at the end of the line or out of options. After all, 70 is the new 60 for many people these days, and you may be embarking on a new chapter in life, love, or business that could change your financial circumstances. The challenge here is to revisit your retirement plan and possibly speak with a financial professional, if you haven’t done so, to maximize all potential income streams and ways to save.
And don’t forget: A 2019 law eliminated the long-standing age limit of 70 ½ for making retirement contributions to your IRA (and Roth IRAs don’t have age limits). If life permits, you can (and should) keep saving.
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401(k) Savings Potential by Age
Suppose an investor maxes out their 401(k) contribution of $20,500 annually beginning at age 25. Also, assume that the 401(k) has an average rate of return of 9.5%. By the age of 65, the investor will have contributed a total of $840,500 of their own money into their 401(k), but because of compounding returns, it could result in a 401(k) savings potential of nearly $9 million.
However, these figures are just hypotheticals to show the power of compounding returns in a 401(k) account. This does not account for fees, changes in contribution limits, a possible 401(k) employer match, or fluctuations in the market. Nonetheless, by contributing to a 401(k) early and often, investors may be able to build up a substantial retirement nest egg.
|
Hypothetical 401(k) Balance by Age, Assuming 9.5% Annual Rate of Return |
||
|---|---|---|
| Age | Total Contributions | Potential 401(k) Balance |
| 25 | $20,500 | $20,500 |
| 30 | $123,000 | $156,187 |
| 35 | $225,500 | $369,790 |
| 40 | $328,000 | $706,052 |
| 45 | $430,500 | $1,235,409 |
| 50 | $533,000 | $2,068,743 |
| 55 | $635,000 | $3,380,610 |
| 60 | $738,000 | $5,445,802 |
| 65 | $840,500 | $8,696,908 |
Tips on Improving Your 401(k) Return
Getting the best rate of return on your 401(k) can help you to fund your retirement goals. But different things can affect your returns, including:
• Investment choices
• Market performance
• Fees
Time is also a consideration, as the longer you have to invest, the more room your money has to grow through the power of compounding interest. If you’re interested in maximizing 401(k) returns, here are some things to keep in mind.
1. Review Your Contribution Rate
The more you contribute to your 401(k), the more growth you can see. If you haven’t checked your contribution rate recently, it may be a good idea to calculate how much you’re saving and whether you could increase it. At the very least, it’s a good idea to contribute enough to qualify for the full employer matching contribution if your company offers one.
As noted above, if your plan offers automatic yearly increases, take advantage of that feature. Behavioral finance studies have repeatedly shown that the more you automate your savings, the more you save.
2. Make Catch-Up Contributions If You’re Eligible
As mentioned, once you turn age 50, you have an opportunity to contribute even more money to your 401(k). If you can max out the regular contributions each year, making additional catch-up contributions to your 401(k) can help you grow your account balance faster.
3. Take Appropriate Risk
The younger you are, the more time you have to recover from market downturns and, thus, the more risk you can generally take with your investments. This is important to note as some risk is necessary to grow your portfolio. On the other hand, being too conservative with your 401(k) investments could cause your account to underperform and fall short of your goals.
4. Pay Attention to Fees
Fees can erode your investment returns over time and ultimately reduce the size of your nest egg. As you choose investments for your 401(k), consider the risk/reward profile and the cost of different funds. Specifically, look at the expense ratio for any mutual funds or exchange-traded funds (ETFs) offered by the plan. This reflects the cost of owning the fund annually, expressed as a percentage. The higher this percentage, the more you’ll pay to own the fund.
Creating or Reassessing Your Retirement Goals
If you’re still working on putting your retirement savings plan together, a 401(k) can be a good place to start. As you decide how much to save, ask yourself these questions:
• What kind of lifestyle do I want to live in retirement?
• When do I plan to retire?
• How much of my income can I afford to save in a 401(k)?
• Is there an employer match available, and if so, how much?
• How much risk am I willing to take with 401(k) investments?
A retirement calculator can help you estimate how much you might need to save for retirement. Some calculators can factor in how much you’ve already saved to tell you if you’re on track with your goals.
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It can be helpful to check in with your goals periodically to see how you’re doing. For example, you might plan an annual 401(k) checkup at year’s end to review how your investments have performed, what you contributed to the plan, and how much you’ve paid in fees. This can help you make smarter investment decisions for the upcoming year.
Improving Your Retirement Readiness
The best way to improve your retirement readiness is to start saving early and often. A good rule of thumb is to save and invest at least 10-15% of your income for retirement. The more you can save now, the greater chance it has to grow because of compounding returns.
But you want to save and invest your money wisely. Consider using a mix of investment vehicles, such as stocks, bonds, ETFs, and mutual funds, to help diversify your portfolio and minimize risk.
Additionally, you can make your money work harder for you by contributing to an IRA and a 401(k). These accounts offer tax advantages that can help you save more money for retirement.
Finally, be sure to monitor your retirement account balances and make adjustments as needed to ensure you are on track to reach your retirement goals.
The Takeaway
What is the average 401(k) balance by age? It’s a tricky question to answer as there’s no single source of information for these numbers. And it’s important to remember that the average 401(k) balance by age is just an average; it doesn’t necessarily reflect your ability to save for retirement.
That said, the average and median 401(k) balances noted above reflect some important realities for different age groups. It’s clear that some people can save more, others less — and it’s crucial to understand that many factors play into those account balances. It’s not simply a matter of how much money you have, but the choices you make. Every stage of life brings unique challenges that can derail your retirement, but with a bit of forethought and planning, it’s possible to keep your retirement on track.
To make the most of your retirement savings, you may want to roll over your old 401(k) accounts to a IRA rollover. SoFi makes the rollover process seamless and simple — with no need to watch the mail for your 401(k) check. There are no rollover fees, and you can complete your 401(k) rollover without a lot of time or hassle.
FAQ
How much do you need to retire?
Determining how much money you need to retire depends on your lifestyle, goals for retirement, and your specific cost of living.
How much should someone in their 60s have in their 401(k)?
The amount someone in their 60s should have in their 401(k) will vary depending on factors such as income, investment goals, and retirement plans. However, as a general guideline, it is recommended that individuals in their 60s aim to have at least eight to 10 times their salary saved in their 401(k) to ensure a comfortable retirement.
How much should I have in my 401(k) by age 30?
Ideally, you should aim to have saved at least the equivalent of your annual salary in your 401(k) by age 30. So, if you make $50,000 annually, you should try to have $50,000 in savings by age 30. This will help ensure that you are on track to retire comfortably.
Photo credit: iStock/kate_sept2004
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