Vanguard released its yearly report on how America saves. This report looked at 5 million of their 401k investors to reveal many interesting facts about how much they save for retirement, the average 401k account balances, how much money they invest, what they invest their money into, and much more. In this video, I’ll go through the most different sections of this report to pull some key data that will interest other investors.
Here’s the original report from Vanguard:
How much money you need to retire:
Investment accounts explained playlist:
Check Out My Recommendations (It helps support the channel):
🔥 M1 FINANCE Investing- Free $10 (once you deposit at least $100 within 30 days)
📝 Empower (previously called “Personal Capital”)- Free Net Worth Tracker & Retirement Planner
🔒 AURA – 14 day free trial to see if your personal information has been leaked online
💎 WEBULL – Up to 12 Free Stocks When You Deposit Any Amount Of Money
💵 ROBINHOOD – 1 Free Stock
📧 Business Inquiries: JarradMorrowYT@gmail.com
As individuals progress through different stages of their careers and income levels, their 401(k) balances tend to exhibit distinct patterns. In general, younger individuals with lower incomes may have smaller 401(k) balances due to the relatively shorter time they’ve been contributing and the challenges of saving amid lower wages. However, as they age and their incomes increase, they have more opportunities to bolster their retirement savings, resulting in a gradual growth of their 401(k) balances. On the other hand, older individuals with higher incomes often have larger 401(k) balances, thanks to extended periods of contributing and the ability to save more from higher earnings. Nevertheless, individual circumstances, market fluctuations, and financial decisions all play significant roles in shaping 401(k) balances, making it crucial for people of all ages and income levels to adopt prudent retirement planning strategies.
The savings rates in 401(k) accounts often vary significantly based on age and income levels. Younger individuals, especially those in their 20s and 30s, tend to have lower savings rates as they may prioritize other financial goals like paying off student loans or saving for a down payment on a house. As individuals reach their 40s and 50s, their savings rates in 401(k) accounts generally increase as retirement becomes a more immediate concern. Higher-income earners typically have the capacity to contribute more to their 401(k) accounts and may take advantage of employer matching contributions. On the other hand, lower-income earners may face challenges in allocating more funds toward retirement due to essential living expenses. To bridge the retirement savings gap across different age and income groups, financial education and policies promoting retirement saving incentives can play a crucial role in fostering a secure financial future for all individuals.
Affiliate Disclaimer: Some of the above may be affiliate links. Support the channel by signing up or purchasing through those links at no additional cost to you. I appreciate you for helping me keep this channel running.
Disclaimer: This video is for entertainment purposes only. Everyone’s situation is different so do your own research before making any decisions with your money….(read more)
LEARN MORE ABOUT: 401k Plans
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
Vanguard Released Data on 5 Million 401k Investors: Key Insights
Vanguard, one of the world’s leading investment management firms, recently released a comprehensive report that provides fascinating insights into the behavior and investment strategies of 401k investors. The data collected from over 5 million participants sheds light on various trends and patterns that may have wide-ranging implications for retirement planning and investment decisions.
The report highlights several key findings, demonstrating the diverse approaches individuals take when managing their 401k portfolios. One of the most noteworthy insights is the increasing popularity of target-date funds (TDFs), which have become the go-to option for many investors. TDFs automatically adjust asset allocation based on the investor’s target retirement date, making them a hassle-free choice for individuals seeking low-maintenance investments.
Furthermore, Vanguard’s data reveals that employers who automatically enroll their employees into a 401k plan tend to have higher participation rates. Automatic enrollment streamlines the process, removing potential barriers for employees and ensuring they are saving for retirement from the get-go. This finding underscores the importance of employer initiatives to encourage retirement savings and highlights the need for employees to fully understand the benefits of participating in 401k plans.
The report also examines the savings rates of various age groups, shedding light on how individuals across different demographics prioritize retirement planning. Vanguard found that younger participants tend to save less, often falling behind older investors who allocate larger portions of their income to their 401k plans. However, starting early and consistently saving small amounts can lead to significant growth over time due to the power of compounding interest. These findings emphasize the importance of educating younger investors about the benefits of saving early and the potential long-term impact of their contributions.
Another interesting aspect disclosed in the report is the difference in investment choices between male and female investors. It was observed that males are more likely to invest their funds in equities, while females tend to lean towards fixed-income investments. This discrepancy in investment allocations further highlights the need for increased financial literacy among women and the importance of bridging gender gaps in investment decision-making.
One of the essential takeaways from this report is the importance of diversification. Vanguard found that investors who allocated their assets more diversely performed better than those who concentrated heavily in a single asset class. This finding aligns with the general investment advice of avoiding putting all your eggs in one basket and emphasizes the value of a balanced and diversified portfolio.
Overall, Vanguard’s data on 5 million 401k investors provides a valuable glimpse into the investment choices, behaviors, and trends prevalent within the retirement savings landscape. These insights can empower individuals, employers, and financial advisors to make informed decisions regarding retirement planning and investment strategies. With a deeper understanding of the various factors that impact 401k investment decisions, investors can better navigate the complex world of retirement savings and work towards securing a financially sound future.
My wife and I have never had an employer that used Vanguard. All of them were Fidelity. That being said, changing employers had us rolling the 401k or 403B into our IRAs. My wife just changed jobs again 1.5 years ago so now her Rollover IRA has about $200k, but her 401k only has about $50k in there. Maxing it out and now that she's 50 we can put more in.
What about folks that have several 401ks with different brokerage companies?
Hi Molly!
Great video!
I can't tell you have a speech issue. I'm lucky I always had a company contributed 401k which I nvr raided. It & 20 yrs of stock investment allowed us to buy a short-sale house in 2012 with cash, when no bank will lend us a mortgage.
Can’t see the charts. Please shorten the video.
I'm too distracted by your hair, your eyes, your face, your muscles…
Handheld jiggly cam is always a bad idea.
I gotta add this, I have a Vanguard 401k with my 2nd job: PT pharmacy tech. I put about 5% pre-tax into it, *HOWEVER*, i dont get the match cuz I dont work 1000 hours in a year. I average like 15-17 hrs per week. Anyways, I still kept it in there and its grown fairly steady in the 3 years ive had it. I kept my investments fairly spread in 5 different index funds, including company stock. So far its hanging at around $2,500 so its a got a ways to go.
Meanwhile the 401k at my main job I have worked at for over 4 years now, Ive put 8% pre-tax and the company matches at 8% and have grown in considerably to over $45k over a range of diverse index funds as well. Overall between my 2 jobs, I put aside 21%, not including what I put aside into my savings.
My philosophy has also been to save as if you're not getting Social Security, and given that I might have between 25-30 years to go, that might be true.
As for switching jobs, Ive gone through a plethora of different jobs since I graduated college, a total of 15 jobs Ive jumped thru in the past 20 years, and by the time 2012 rolled around I lost a great design job and had to literally start from scratch, working 2 jobs and earning $8.50/hr… each. Soon I worked as a teller at a bank, earning $12/hr. It offered a 401k at Charles Schwab, and I took to it, while still working my other 2 jobs. In effect, Inwas working 3 jobs, totaling almost 80 hrs/wk. I was practically nickel and diming my retirement.
Nowadays, since 2019, I actually like both my jobs, and since the pandemic has upped everyone's salaries, Ive seen my annual salary at my main job increase by 63% since 2019, and my second job increase 57% in 5 years. Id say I caught lightning in a bottle here and wanna stick around as a good career option.
I'll continue to keep my investments going by dollar cost averaging, keep a decent mix of index funds and bonds, and ensure to keep going. Currently at my age range Im between the median and average totals, but I hope to be above average before I get to put my paperwork in to retire.
I'm 45 with 650k saved between roth ira,roth 401k,and traditional 401k. Make about 100k . I save 22% of my base salary in a roth 401k and I get an 18% match and contribution. Been at same employer 21 years.
Thank you for posting this helpful video
I would not use Vanguard or Blackrock because of their pushing ESG which is not good for the shareholders. Surprised they have not started a class action suite yet.
Using the average balance in a Vanguard 401k to make speculations about the public is meaningless. I have 30k in my current 401k which is maintained by Vanguard. That's because when I left former jobs, I moved the 401k to IRA and Roth compatible brokerage accounts so that I have full freedom to invest my money how I please.
Tons of information! I will have to watch at least twice.
To amplify your point on the younger people increasing their investments by 1%, that 1% is just as powerful as saving 1% on fees (Vanguard!!!) over the lifetime of your investing! Add the extra $ with employer match, if available, and the amplification over 40 years is staggering… in a good way! (Jarrad, I know you know that because you basically say this is most of your videos. I just want to add my voice to your message!)
Just to add to the discussion at 3:38 . It's generally a good idea to keep 1-3Y of living expenses in cash or cash equivalents after retiring. Think of it like the retirement version of the emergency fund. This is what you drawdown during bear markets to help mitigate sequence of returns risk and protect overall net worth. Most bear markets don't last more than ~1Y and even the longest on record was just 21 months, but some super risk-averse people still like to keep 3Y in cash if they can as a black swan hedge. I'm not saying that's wise, but 1Y worth of funds is almost always a good idea if a retiree can afford it.
One thing about changing jobs is that some employers will require you to stay with them for at least 3-5 years in order to get the employer matched 401k contributions and pension.people frequently switch jobs can lose too much of that part of their money
Useless without averaging in people's IRA balances
My 401K balance 1.5X median of age group I am in, upper 30s. Largest retirement amount is my total 401K which I contribute 20-25% income towards.
Do you think it's beneficial to hold a Target Date Fund from lets say Age 27 to 35? And then switch it to something else to avoid the account becoming too conservative with Bonds and so forth? I'm 27 and really just started my 401k last year and my current TDF (2060) has earned close to 14.41% Year-To-Date and 11.65% since August of last year. So it's going good so far! I just know that down the line it becomes pretty conservative. Thoughts?
Currently putting 20% in my wife's 401k started 2 years ago at age 40 also putting 5% into my roth 401k which just started in july I'm currently 52 years old we started late but at least we started her income is 68k mine is at 75k soon to be 80k. Those are our numbers.
I have half in Vanguard and half in Fidelity. They have no way to know how many people have multiple accounts, which I suspect is many.
Great video!
Question for you – i am in a first time position this year where i am about to max out my 401k and i will make to much for a roth ira. My company does not allow me to contribute after i max out 401k so i cant do a backdoor. Any suggestions?
I Hope vanguard gets shareholder lawsuits due to all the woke ESG bullshit