Average 401(k) Balance by Age (2023 Edition)
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Average 401(k) Balance by Age (2023 Edition)
Planning for retirement is an essential aspect of financial management. As individuals progress through their working years, accumulating funds in a retirement account becomes a priority. A popular retirement savings vehicle in the United States is the 401(k) plan. This employer-sponsored retirement account allows individuals to contribute a portion of their salary towards their future financial security.
It is important to keep track of the average 401(k) balance by age to gauge one’s progress and compare it to the broader population. Understanding where you stand in terms of retirement savings can help guide your financial decisions and adjustments to ensure a comfortable retirement lifestyle. Let’s take a closer look at the average 401(k) balance by age as we enter 2023.
In general, as individuals grow older, their average 401(k) balances tend to increase due to increased earnings, longer periods of contributions, and potential employer match programs. These factors play a crucial role in the overall growth of retirement savings. However, individual circumstances may vary, and it’s important to note that these figures provide a general overview, not personalized advice.
For individuals in their 20s, starting their career journey, the average 401(k) balance is typically lower, understandably. According to recent data, the average balance for individuals between the ages of 20 and 29 is around $10,000 to $20,000. It may seem relatively modest at this stage, but the key is to establish a habit of consistent contributions and take advantage of employer match programs to help accelerate the growth of your retirement savings.
Moving into the 30s and 40s, individuals generally witness a significant boost in their retirement account balance. According to current statistics, the average 401(k) balance for those aged 30 to 39 falls between $60,000 and $90,000. By the time individuals reach their 40s, the average balance tends to range from $100,000 to $200,000. This growth is often attributed to higher earnings, promotions, and potentially increased contributions as individuals progress in their careers.
Entering the 50s and 60s, retirement planning takes center stage. These age groups are categorized as crucial times for individuals to ramp up their savings efforts. According to recent data, the average 401(k) balance for those aged 50 to 59 ranges from $200,000 to $400,000. As individuals approach their retirement years, they often contribute more, take advantage of catch-up contributions, and may benefit from additional employer contributions, leading to a substantial growth in their retirement savings.
Finally, individuals in their 60s, approaching or in retirement, witness further growth in their 401(k) balances. The average balance for those aged 60 to 69 typically ranges from $400,000 to $600,000. Ideal strategies at this stage include evaluating investment portfolios, considering longevity risk, and determining appropriate withdrawal rates to ensure that accumulated savings last throughout retirement.
While the average 401(k) balance by age can be a useful guide, it’s important to note that everyone’s financial situation and retirement goals are unique. Factors such as income level, career path, lifestyle choices, and unexpected life events can significantly influence retirement savings. Therefore, it is highly recommended to seek personalized financial advice from a trusted financial advisor to make informed decisions tailored to your specific circumstances.
In conclusion, understanding the average 401(k) balance by age provides valuable insight into the progress of your retirement savings. Knowing where you stand in relation to your peers can help inform your financial decisions and motivate you to adjust your savings strategies accordingly. However, it’s crucial to remember that these figures are averages, and individual circumstances vary greatly. Seek professional advice to create a personalized retirement plan that optimizes your financial security and ensures a comfortable retirement.
10 years ago i stoped putting into my 401 and concentrated on getting dept free, which happened 3 years ago. My house payment is $ 225 amounth (tax and full replacement ins.) Cars motorhome and credit cards.
We only need 30% of our income to live now.
With no dept you don't need much. Yes we are saving 50% of our income now.
How much interest are you paying per year, what a wast!
I’ve been diligently working, saving and contributing towards financial freedom and early retirement, but the economy so far since the pandemic has eaten away most of my portfolio, what I want to know is this: Do I keep contributing to my portfolio in these unstable markets or do I look into alternative sectors.
20s start at 39:13
A Friend told me Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. is this a good way to potentially grow my retirement savings to about $3M over time?
Brian is excited again?
Really like the show and all of your suggestions. I have one question, I have increased my % of contribution to my 401k to 15% and recently found out that I can only contribute up 30k per year. I’ve just been informed by my employer that under my current contribution % I will max out. What are my options?
It always amazes me the number of people who don't participate, even partially, in their employers' 401K. Many years ago I started a job and in very short period of time I discovered how many employees, mostly women, didn't participate. I started having what I called "sit downs" with individual employees to explain that they were missing out on free money. Finally, my employer started offering lunch 'n learns, wherein an expert would come in and offer a class in investments. The participation in the 401K sky rocketed.
Guys, here is a statistic. Half of the people in the US have 0 saved for retirement at age 55.Think about it!!
25% is a lot of money for a single income household. I've been saving 8-12% for 16 years and I have a little over $500,000 in my 401k and $150,000 in a pension. I don't know how much more I would need but I'm done at 60 yrs and I'm now 48 yrs. I hope it's enough.
Roth 401k is sexy AF
It’s a bit deceiving for some folks. Because many employers have vesting periods (i.e. where you only get 20% of their matched contributions after 2 years service. 100% after 5 years service.) So the “you get a 100% ROI on 1:1 401k employer matching” is not true. It’s more like <20%, still high…but let’s be honest.
What this video seems to ignore is the spending side of your life in your 30’s, 40’s and 50’s. Don’t spend frivolously, and after your 401 contributions, put your extra money into an investment account, and manage it. I had an awakening in my early 40’s, when I had zero net worth. I retired in my 50’s with more than a million dollars in liquid assets, and a net worth well north of that. Anyone with a decent income and the desire to achieve wealth can do this, but it does require sacrifice. Eat some macaroni and cheese for a while, and you’ll see what I mean.
I don't even know what a 401k is and I'm 30. I'm on disability and make less than $14k a year, so that probably has something to do with it. This video is way above my head.
Video could use demarcations in the time slider indicating different topics or ages as discussed
It is pretty vague to talk about the average savings of people "in their 20s, 30s or 40s". There is a big difference between 20 & 29, 30 & 39, 40 & 49 etc (and yes I realize the difference is 9 years…). It would be better to look at average savings by age 20, 30, 40, 50, 60 & 70 for full-time employed Americans. When you say the avg person in ther 20s has $21k…is that an average by age 25? Same question for 30s and 40s. I had about $20k by the end of my 20s and now by age 44 I have about $180k w $75k in a Roth, $80k in a trad IRA and about $30k in the 401k at my new job. My job has a defined benefit pension plan in which i am vested and I am vested in a police pension plan (but only 7 years of service there).
Successful investing is hard work because it means disciplining your mind to do the opposite of human nature. Buying during a panic, selling during euphoria, and holding on when you are bored and just craving a little action. Investing is 5% intellect and 95% temperament.
Thank you for explaining that Roth isn’t always better especially for higher income individuals with 32% and higher tax brackets. I learned this the hard way a few years ago. I was maxing out for Roth 401k and went into next tax bracket by only a couple thousand dollars resulting in much higher tax liability. My tax preparer recommended I switch to pre tax 401K contributions the following year and that has helped a bit to reduce.
There was a lot to absorb here, but I’m going to have rewatch taking notes, as running out of ways to reduce tax liability. My hubby turned 50 in 2023, so we boosted his contribution to the max $30k so that should help a bit too.
One question: is that 4-8 x’s your income in 40’s-50’s age range, for retirement balance accurate if you’re at peak salary years? I’ve done a bit of analysis and if your house is paid off, no debt, have life insurance policy that covers medical complications, why would you need like $500k+ per year to live off of during your retirement years? Even with travel and fun things, I estimated it closer to $100k. We plan to move to no tax state like TX or even out of country to low cost living like Portugal or Thailand. No way would we need that much money per year!
LIFESTYLE!!! LIFESTYLE!!! LIFESTYLE!!!
I'm in my 20s and have higher than what most should have at 40. I've been doing about 20%.
401 (k)'s are obsolete.
I have been procrastinating about investing for a while now. I really want to invest this time, but the question now is, how to begin safely as I do not want to get burnt. How did you do it?
I'd be retiring or working less in 5 years, and I'm curious how others split their pay, how much goes into savings, shopping, or investing; I earn roughly $250K per year but have nothing to show for it.
I’m a really nervous person when it comes to my retirement. If there’s one thing my father really taught me well, it was to save money in your retirement. At times I feel like I’m a little too “gun ho”… for the last five years I’ve put 30% of my income into my 401k which includes a Roth type thing as well. I put 17% in a normal pretax and 13% in an after tax. On top of that I get a 100% match up to 4%….. and it drives me crazy because I don’t feel like I’m saving enough. I’m 48 and my last day of work will be without a doubt at 591/2. I’ve been saving for 11 years total and have 11 more to go. Am I overthinking things, or am I doing the right thing keeping these numbers the way they are for the next eleven years?
I'm screwed. I was a single dirt poor mom taking care of two kids, one who had severe medical problems. I was locked at home. No income until I hit 40. I'm screwed.
Man, that average value for a 20-something being about double what I have at 23 kinda stung.
I’m feeling like I can’t afford such a dramatic savings rate but I’m maxing out my employer contributions, maxing out their stock purchase program, and contributing some to my HSA.
Should I be prioritizing my ROTH 401k over all those things to hit that 25% mark? Or is 25% the goal for ALL saving and investing?
I'm not sure these averages reflect reality because many people have several 401k from switching employers. If you have 50k on Fidelity, 50k on Vanguard, and 50k on Wells Fargo, Fidelity would calc the average as 50k, but that's clearly not correct per person.
Americans estimate they’ll need more than $1 million to retire comfortably, but most aren’t bullish about meeting that goal. I’ve been sitting on over $745K equity from a home sale and I want to invest on the stock market, how do I achieve this?
Wow. I have 91,689.29 saved across two 401ks and a Roth IRA. Age 24.
The averages in 401k by age is pretty low.
well said! Turning 54 in 3 days. Nearing $1 million in the 401k. Would have reached that last year but market dipped. I just stuck to the plan and kept adding shares for less and now the market is starting to creep back up again. Will see that magic million soon i hope…Army of dollars, strength in numbers!