Save more, spend smarter, and make your money go further Most people have a different definition of a comfortable living, so addressing how much you should have in your 401(k) is not a simple black-and-white answer — the amount will vary based on age, lifestyle, and finances. So, how much should you have in your 401(k) compared to others your age? Continue reading to learn the average 401(k) balance by age and how you can compare your investments for retirement.  What Is the Average and Median 401(k) Balance by Age?401(k) balances can average roughly $6,000 at the age of 24 to more than $255,000 at the age of 65. Both average and median 401(k) balances can vary greatly depending on a few factors. This can include how long you have been saving for retirement or whether your company provides 401(k) matching, which is when your employer contributes to your retirement savings based on the amount of your contribution. While savings are personal, the idea of a “nest egg” will likely make you contemplate what your financial future holds. Retirement might seem like a long way down the road, but time flies faster than we realize. And the earlier you start saving for retirement, the better off you’ll be later in life. Knowing the 401(k) average by age can help you figure out where you stand and how you can be better prepared for the future. Here’s what you can learn from Vanguard’s research on How America Saves in 2021:
Source: Vanguard Less Than 25 Years Old
Although many people younger than 25 years old are new to the workforce or are not in a job where a 401(k) plan is offered, their average 401(k) balance increased 23 percent in 2020 compared to 2019, and 49 percent of those who are eligible for a 401(k) plan are participating in it. This indicates that this generation is indeed planning for retirement early on. 25-34 Years Old
From 25 to 34 years old is the prime time to start aggressively putting money in your 401(k) savings, since you have likely been in the workforce for a couple of years at this point. In fact, this age group saw a 23 percent increase in average retirement savings in 2020 compared to 2019, with a whopping 79 percent of eligible workers participating in a 401(k) retirement plan. 35-44 Years Old
If you haven’t yet started contributing to your 401(k) or just recently joined a company that offers 401(k) matching, 35 to 44 years old might be the time to start considering investing in a 401(k) and potentially maxing it out, meaning you would be contributing the highest amount allowed for the year. The possibility of compounding interest on the retirement plan has attracted 82 percent of eligible workers in this age group to participate, with an increase of 13 percent in the average 401(k) balance in 2020. 45-54 Years Old
When you hit your 50s, you become eligible to start making larger contributions to your 401(k). Take advantage of this larger contribution of $6,500, sometimes called the “catch-up contribution,” as there was a 19 percent increase in 2020 in the average 401(k) balance among 45-54-year-olds, with 83 percent participating in a 401(k) plan. 55-64 Years Old
In your late 50s and early 60s, you will likely have a better idea of what your retirement savings are and you might start making more specific plans for your future. If you’re still working at a company that offers 401(k) matching, this is a great chance to increase your savings for a couple of years more. In fact, this age group saw a 17 percent increase in the average 401(k) balance in 2020 compared to 2019, and 84 percent of eligible workers are still participating in the plan. 65+ Years Old
Although many workers plan to retire at 64, the average retirement age is 62, which is probably why there was a decrease in workers participating in a 401(k) plan from 65 and up in 2020, which is currently at 74 percent. Although fewer people are participating, this is still a good time to continue contributing if you’re able, as the average 401(k) balance in 2020 increased 17 percent from the previous year in this age group. How to Prepare for Your RetirementNot everyone gets the opportunity to invest in a 401(k) early in life. As soon as it becomes available, it’s best to consider taking advantage of this benefit. As of 2022, individuals under 49 can legally contribute $20,500 per year. Those 50 or older can save an additional $6,500 as a catch-up contribution. Starting early will allow you to have more saved by the time of retirement. Improve Your 401(k) BalanceImproving your 401(k) balance depends on how well you can handle your finances and how much you can contribute to it. Doing your research for the best interest options for your 401(k) plan can be a good way to start building compound interest, which will result in a higher balance. If you think you’re at a good place with your finances and making sure your living expenses and debts are being paid off, it might be worth considering maxing out your 401(k) contributions. According to Vanguard, only 12 percent of 401(k)participants maxed out their contribution limit of $19,500 in 2020, and you could be one of them. Whether you start small or contribute close to the limit, consistently contributing to your 401(k) and making sure your plan meets your goals will help you improve your average 401(k) balance and save more for retirement. Prioritize Your Retirement SavingsWhether you started saving late or are frugal with your finances, there are several things you can do to increase the amount of money you put toward your 401(k). It’s advisable to add one year of gross salary saved every five years. So when you’re 30, you’ll want to have saved one year’s worth of your salary; at age 35, you’ll want to have saved two years’ worth of your salary; and at 40, you’ll want to have saved three years’ worth of your salary.
Make compound interest work for you: Compound interest is a simple concept that can rapidly cause wealth to snowball. It happens when the interest that accrues on an amount of money, in turn, accrues interest itself. Do your research to see which 401(k) plans have the best interest-bearing options. Learn From Your 401(k) BalanceAlthough learning about the average 401(k) balance by age might help you understand where you stand compared to others, it won’t help you analyze your retirement situation altogether. Since everyone has different finances, lifestyles, and unexpected emergencies, it’s important not to use 401(k) balance by age as your only benchmark. Instead, you can use it as a way to motivate yourself to start making better financial decisions and contribute more each year. A good way to benchmark your savings is by using a retirement calculator that will give you more information on how much you will have saved by a certain age and how much you should be saving monthly to achieve your retirement goals. Bottom line: Saving early can set you up to be more prosperous later in life. Calculate Your Retirement Savings Here are some commonly asked questions about 401(k) balances by age. How Much Should I Have in My 401(k) at 30?By the time you are 30, it’s ideal to have a 401(k) equal to about one year’s salary — so if you make $50,000 a year, you’d want to have $50,000 saved in your 401(k) account. How Much Should I Have in My 401(k) at 40?By age 40, having three years’ worth of salary in your 401(k) is a good amount — so if you make $70,000 a year, you should have approximately $210,000 saved in your 401(k) account. How Much Should I Have in My 401(k) at 50?By age 50, it’s recommended to have roughly five years’ worth of salary put away. Assuming your annual income has increased to $80,000, this would mean that you’d want to have saved $400,000 in your 401(k) account. What Is a Good 401(k) Balance at Age 60?At the age of 60, you are getting closer to your retirement age, so it’s recommended to have around six to seven years’ worth of your salary put away at this point. If your annual income is $90,000, this means you would want to have around $540,000 to $630,000 saved up for retirement. What Is the Average 401(k) Balance at Retirement?According to Vanguard, the average 401(k) balance at the time of retirement, meaning 65 years and older, in 2020 was $255,151. How Much Does the Average American Have in Their 401(k)?401(k) balances differ depending on your age. For perspective, the average American who is younger than 25 has $6,718 in their 401(k) while the average American who is older than 65 has $255,151 in their 401(k). How Much Do You Need to Retire Comfortably?How much you need to retire comfortably isn’t black-and-white because the cost of living looks different for each individual. Consider what it takes to live comfortably and maintain your lifestyle. Many experts suggest that you’ll need roughly 80 percent of your salary after retirement to avoid making sacrifices. The Bottom LineMost of us look forward to our retirement years, where the money we’ve worked so hard for is now working for us. A 401(k) is one way to achieve a nest egg, so it’s important to take advantage of this benefit if your employer offers it. Planning for a comfortable retirement takes time, due diligence, and budgeting. It’s important to consider your future lifestyle and know where you stand financially by looking at the average 401(k) balance by age, so you don’t have to worry when you reach your golden years. Source: Vanguard Save more, spend smarter, and make your money go further Mint is passionate about helping you to achieve financial goals through education and with powerful tools, personalized insights, and much more. More from Mint Browse Related ArticlesChapter 09: Average 401(k) Balance By Age: Am I on Trac…This Is What Happens to Your 401(k) When You QuitThe Basics of a 401(k) Retirement PlanDo We Live in the Golden Age of Investing?Chapter 07: Investing in a 401(k) vs. 403bHow To Roll Over Your 401kChapter 01: How Much Do I Need to Retire?MintLife Reader Q&A: 401(k)s, 457(b)s, and IRAs &#…MintLife Reader Q&A: Direct Investing, IRAs, and 4…How to Rank Your Investments: Your Financial PyramidHow much 401K should I have at 35?So, to answer the question, we believe having one to one-and-a-half times your income saved for retirement by age 35 is a reasonable target. It's an attainable goal for someone who starts saving at age 25. For example, a 35-year-old earning $60,000 would be on track if she's saved about $60,000 to $90,000.
How much should a 33 year old have in 401K?Average 401k by Age (Vanguard). How much should I have in my 401K at 32?This is how much Fidelity recommends Americans have saved at every age: By 30, you should have the equivalent of your salary saved. By 40, you should have three times your salary saved. By 50, you should have six times your salary saved.
How much should I have in my retirement at 30?By age 30, you should have saved an amount equal to your annual salary for retirement, as both Fidelity and Ally Bank recommend. If your salary is $75,000, you should have $75,000 put away. How do you do that? “When starting your career, commit to automatic savings of 20% per year into your 401(k).
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At 30 how much should i have in my 401k
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