Is your 401(k) balance keeping up with the Joneses? Be honest. You can admit it. You — like most U.S. workers with a 401(k) — are curious about how your personal nest egg stacks up against the average 401(k) balance by age.
Saving for retirement, of course, is a source of angst for Americans in a world where traditional pensions are fading into obscurity and inflation is eating into monthly budgets. So, it’s no surprise that when fresh data highlighting average 401(K) balances by age are reported, savers check to see where they stand versus their peers.
Benchmarking your 401(k) wealth versus savers in your same age bracket, though, may not offer many clues as to your odds of attaining a secure retirement as you might think. Average savings totals don’t consider important variables, such as salary, investment return projections, how many years before retirement, longevity estimates, and how much money you’ll need in retirement. Average balances can also be skewed by super savers with high balances or young workers starting out with extremely low balances.
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“These average balances can give people an idea of where they might be, given their age,” said Kelly LaVigne, VP of advanced markets and solutions at Allianz Life Insurance Company of North America.
The danger of the average balance, though, is that it doesn’t really explain retirement readiness.
“This information tells us what the average American has saved,” said LaVigne. “But personal finances are, well, personal. Your financial picture may look much different than the average American.”
Average 401(k) balance by age
Here’s the average 401(k) balance by generation and age as of March 31, 2024, according to Fidelity Investment’s “Building Financial Futures” report, which is based on the 23.3 million 401(k) accounts it manages. (Note: the average 401(k) balance was $125,900.)
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| Generation | Age Range | Average 401(k) Balance |
|---|---|---|
| Gen Z | Born 1997-2012 / Age 12-27 | $11,300 |
| Millennials | Born 1981-1996 / Age 28-43 | $59,800 |
| Gen X | Born 1965-1980 / Age 44-59 | $158,500 |
| Boomers | Born 1946-1964 / Age 60-78 | $241,200 |
What jumps out is how low these 401(k) savings balances are versus what most savers think they will need to retire comfortably. U.S. adults estimate that the magic number of retirement savings they believe they’ll need is $1.46 million, as a recent study by Northwestern Mutual reported. And working Americans 45 and older think they’ll need a nest egg of $1.1 million, according to Schroder’s 2023 U.S. Retirement Survey.
“What the (average 401(k) balances by age) tells us is investors are not saving enough to afford a comfortable retirement,” said Anthony Ogorek, president and founder of Ogorek Wealth Management.
Let’s also look at average 401(k) balances by age band, which shows how much account holders have saved during each decade of their life. Compare that to Fidelity's recommended retirement savings amount by age, as measured in the multiples of salary a worker should save by a given decade in life.
Here’s the average 401(k) balance by age as of March 31, 2024, according to Fidelity.
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| Age | Avg. 401(k) balance | You should have saved at least |
|---|---|---|
| 20s | $17,700 | Row 0 - Cell 2 |
| 30s | $56,200 | Salary x 1 |
| 40s | $124,400 | Salary x 3 |
| 50s | $212,400 | Salary x 6 |
| 60s | $239,900 | Salary x 8 (and 10x by age 67) |
| 70s | $239,600 | Row 5 - Cell 2 |
If your 401(k) balance is below the averages listed above, don’t despair.
“Your reaction shouldn’t be giving up, or saying, ‘Oh no, I’m so far behind, I’ll never make it up,’” said Lisa Featherngill, national director of wealth planning at Comerica Bank. “Use it as a catalyst to make needed changes to boost your savings.”
Instead, consider using traditional rules of thumb or savings guideposts to better help you determine how much you need to save, gauge if you’re on track, and whether you need to tweak your savings strategy. Hopefully, eyeballing these guideposts will serve as a wake-up call to prompt action.
Fidelity, for example, recommends using savings milestones that home in on two savings data points that are more specific to you: your age and your salary, says Michael Shamrell, VP of workplace thought leadership at Fidelity.
Using Fidelity’s guidelines, you should aim to save one times your salary by age 30, three times your pay by age 40, six times by 50, eight times by 60, and 10 times by age 67. So, if you’re 40 now and earn $45,000, you should have $135,000 socked away. And if your salary rises to $60,000 a year near retirement, you’ll need $600,000 saved by the time you’re 67, which is when most Americans reach full retirement age and are eligible to receive full Social Security benefits.
“It helps you know where you are on your savings journey, sort of like a map if you’re driving from San Francisco to Dallas,” said Shamrell. “You want to know if you’re headed in the right direction. Are you on the right road? Do I need to make a turn? It helps savers know if they’re on track or if they need to make any changes?”
Act, don't panic if you're behind
The good news? 401(k) savings balances are far less crisis-like for long-term savers, Fidelity data show. What may look like a low balance today can grow in value over time with steady saving, portfolio gains, and compounding. For example, the average balance for savers who’ve been investing in the same 401(k) continuously for 15 years was around $500,000, and about $400,000 for those saving for 10 straight years, Fidelity data show.
Here are ways to play catch-up if you’re currently behind on your savings.
Save more. Fidelity recommends saving 15% of your salary, including your company’s matching contribution. In the first quarter, 401(k) savings rates at Fidelity hit a record 14.2%. To reach that goal, boost your 401(k) savings when you get a raise or bonus. Or commit to saving 1% more each year until you reach your savings target. Signing up for automatic savings increases is a smart move.
Don’t miss out on your employer's match. More than 85% of Fidelity 401(k) plans include a company match. Make sure you contribute enough to earn the full match so you don’t leave money on the table. “This can help accelerate your retirement savings,” said Sarah Darr, head of financial planning at U.S. Bank Wealth Management.
Take advantage of catch-up provisions. Savers 50 and older can sock away an additional $7,500 above the regular $23,000 401(k) contribution limit in 2024. And starting in 2025, thanks to the Secure Act 2.0, savers ages 60-63 will be able to boost their catch-up contribution to $10,000 or 150% of the regular catch-up limit, whichever is greater.
Invest more aggressively. Assets with growth potential, such as stocks, will give you a better chance of building a larger nest egg. A target-date fund that determines your mix of stocks and bonds based on your age and retirement is a way to get proper exposure to stocks.
“It’s never too late to save for retirement,” said LaVigne.
The key, though, is to set realistic savings goals, says Brad Bartick, a wealth planner at investment firm Baird.
“Setting an unachievable goal may douse the (savings) fire before it has a chance to build because discouragement invites the risk of halting savings,” said Bartick.
Read More
- Roth 401(k) Contribution Limits for 2024
- Using Your 401(k) to Delay Getting Social Security and Increase Payments
- Should You Convert a Traditional 401(k) into a Roth 401(k)
- New Roth 401(k) Changes: What You Should Know for 2024
- How to Have a Happy Retirement
