Average 401k Balance 📊 for 50 & 60 Year Old Retirement Investors 💵 (2022 Edition)
In this blog, I want to show you the average 401k balance for investors ranging in age from 45-65. I also want to give you the median 401k balance for investors in the same age range.
401k’s are one of the most popular retirement investment vehicles that individuals use to grow their retirement savings. As an employee, you are allowed to contribute $20,500 into your 401k on a yearly basis. If you are over 50, you can contribute another $6,500 into your 401k. According to the US Census Bureau, only 41% of individuals actually contribute to their 401k plan. With 401k balances (we will see this in a moment) being so low for individuals approaching retirement, what can you do to increase your 401k balance and retirement savings?
1. Contribute the catch-up provision to your 401k
If you are over the age of 50, you have the ability to contribute an extra $6,500 into your 401k each year. Those extra dollars in your prime working years can really give a boost to your 401k balance and retirement savings overall.
2. Review Your 401k Investments Yearly
Make sure you are reviewing how you are investing your 401k on a yearly or even bi-annual basis. As a financial advisor, I see so many 401k’s that are inappropriately invested based on the 401k participants age or how long they are going to work.
3.Work with a professional
This might seem simple, but a financial professional can really help direct you in making the right choices inside your 401k and outside in your retirement planning. For many of my clients, their 401k is their only investment and that is why we work together. To protect their 401k so that they can retire with confidence.
So what are the actual 401k balances for retirement investors in their 50’s and 60’s? Take a look at the stats below from a recently released report from Vanguard:
45-54 Average 401k Balance: $161,000
55-65 Average 401k Balance: $232,000
65-Up Average 401k Balance: $255,000.
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The 401k is one of the most widely used retirement savings vehicles in America. It is a savings plan sponsored by employers to help employees save and invest for their retirement. As we approach 2022, the average 401k balance for 50 and 60-year-old retirement investors is something to take note of.
A 401k plan allows employees to defer a portion of their salary into a tax-deferred account. This money grows over time, and the employee can choose from various investment options offered by the plan. The employer may also choose to match a percentage of the employee’s contributions, up to a certain amount.
The average 401k balance for 50-year-old retirement investors is $180,000. This varies based on several factors, such as income, job tenure, and contribution rate. However, this figure is a good indicator of how much the average American worker has saved for their retirement. For 60-year-old retirement investors, the average 401k balance is $319,000. This reflects many years of diligent saving and investing to provide their retirement income.
It is important to keep in mind that these figures are just averages, and every individual’s retirement savings will be different. Factors such as health, life expectancy, and retirement goals will influence how much money a person will need in retirement.
To ensure a comfortable retirement, financial advisors suggest that workers aim to save between 10-15% of their income for retirement savings. In addition, those who are closer to retirement age may want to consider taking advantage of “catch-up” contributions. Starting in the year you turn 50, you can contribute an additional $6,500 to your 401k plan, on top of the regular contribution limit of $19,500.
In conclusion, the average 401k balance for 50 and 60-year-old retirement investors is a helpful benchmark to gauge how much money someone may need in retirement. However, it is important to remember that everyone’s retirement savings will be different, and diligent saving and investing is necessary to ensure a comfortable retirement. So, it is important to start saving early for the retirement.
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How do you know someone won't be able to retire with a particular 401k balance? Maybe they count in social security, rental property to go along with 401k
Drew, are these numbers what you are seeing also from people in these groups? I've always wondered if these average 401k balances are accurate. For instance, i changed jobs about a year ago, and my 401k is only $18k from my employer, but a few hundred k in an IRA through a different provider. If my 401k provider took the averages, I would only count as $18k, which is nowhere near what I have for retirement which would skew the numbers.
How high does it have to be
Thanks for sending mean and average but what about percentage ?
That is so sad, no counting my 401k, I started a sailboat fund (still putting in my 401k) and in 18 months I managed to put almost 80k into my sailboat fund. When it hits 400k I will retire.
Just came across your channel. I enjoyed your discussion. However, you said something that concerned me. You said you were, your [audiences] virtual financial planner. There are people out there will take what you say to heart and blame you if they run into trouble. I would not label myself as someones financial planner and take on potential liability unless, I really was. My two cents. Otherwise, very good.
Rice and beans are actually very healthy for you!
I’m 48 years old. The house is paid in full. I do regret not starting earlier in my 401k but life happens. Anyways I have $180k in a Roth 401k so that’s free of tax. And I’ll be getting a $4,200 a month pension starting at 59 years old. When I was younger I felt like the pension gave me some security. But now I wish I did more into the 401k
Some use the 401k as the sole retirement plan but I am a 40 yr old female taxable accounts and traditional and Roth iras but my 401k is only 12k. Not a relevant percentage of my net worth I also have 6 month in an emergency fund…
Interesting but I consider overall net worth to be a better indicator of financial well being.
These figures will mean even less moving forward as the younger generations do more job-hopping and have their retirements savings scattered over multiple different 401k programs.
401K balance is pretty meaningless. Mine is actually only around $20,000 and I'm in my fifties. Of course I have three rollover IRAs.
I 100% agree if you get a match you should invest in a 401k.
If you don't get a match you need to do your homework. Some 401ks are high fee and have limited choices. IRA's(Roth or traditional) in general are better especially for people who make low income or save low amounts of money.
Thank you Drew. You are spot on, those numbers for 65 y/o at $255K/$82 should be much more than 3x that what you have shown. Those Vanguard numbers must be at least 3 weeks old, so in reality, what you are showing are at least 4-6% less in true valuations as of May 1, 2022. The Market had a very rough April, and who know what the future will bring us. I would think, anyone 60+ y/o with less than $1.5M in retirement accumulated saving (all vehicles) should think long and hard about setting a retirement date anytime soon. Hopefully the market will bounce back, but with inflation predicted to continue reaching new high through sometime in 2023, it does not look promising to my eyes. For those <55 y/o, sock away as much make-up retirement saving money as possible and hire a professional wealth manager of your choice. The younger saver the better and easier to realize the compounding effects of savings. Most CFP and Wealth Managers know what they are doing and can make a huge difference in the long run.
In most financial situations it is useless to use averages and medians. Maybe they give you a sense of "I'm doing well"?
At age 50 I began investing in multiple assets and cut my 401k contribution down to 3%. I started diversifying into dividend stocks at first and then bought 2 rental houses. Since I retired I am down to 1 rental house.
At age 58 I sold 2 homes and kept all that money in "cash" and have about 22% of my total assets in cash. This allows me to manipulate my taxable income.
It's truly sad to see 60+year old couples having to go to work every day because they wanted big houses and new cars. I have friends who made $300k a year that have to work because they haven't saved enough to maintain their lifestyle in retirement. They still want to live in a 5,000 sf home for just 2 people and a couple of dogs.
Meanwhile my wife and I paid cash for our farm where we raise 75% of our food. I just got back from a week of fishing at Lake Okeechobee. You need to come down when we go back and do some Everglades fishing. It's truly an awesome experience.
that not really comparable unless its covered the following in those 100+ pages. its only like that for three reasons 1) your in the same job and havent left 2) not doing the company match or up to the max 3) left a job and rolled the old 401k's over into an IRA. I just started a new job Jan 2022 i only have 10k in the current 401k as i max it out however my IRA is well over 500k from old rollovers.
Interesting