Spoiler: It’s far too little for far too many people.
So you’ve been diligently saving and investing for retirement, as most of us should be doing. Good for you! (If not, it’s probably not too late to start.) You may reasonably be wondering how you’re doing compared to others. Here’s a look at the average 401(k) balances for people in various age groups.
Image source: Getty Images.
Let’s start with the data:
|
Age |
Average 401(k) balance |
Median 401(k) balance |
|---|---|---|
|
Younger than 25 |
$7,351 |
$2,816 |
|
25-34 |
$37,557 |
$14,933 |
|
35-44 |
$91,281 |
$35,537 |
|
45-54 |
$168,646 |
$60,763 |
|
55-64 |
$244,750 |
$87,571 |
|
65+ |
$272,588 |
$88,488 |
|
Total average |
$134,128 |
$35,286 |
Data source: How America Saves 2024, Vanguard.
If you’re 62, you can see that those aged 55 to 64 have an average balance of $244,750. That might seem pretty good, but these folks may be only one to 10 years away from retiring, and $244,750 won’t get them very far.
If you apply the helpful-but-flawed 4% rule, you’ll take 4% of your nest egg out in your first year of retirement, adjusting for inflation in subsequent years. (There are potentially better withdrawal strategies to consider, by the way. This is just the most famous one.) If you retired with, say, $400,000, you’d be withdrawing 4% of that, or $16,000.
That’s not much to live on. You’d have Social Security benefits, too, of course, but as of August, they only averaged about $23,000 annually. Together, those sums give you $39,000 for the year. Yikes.
Worse still, that average amount above includes some hefty outlier accounts. If you instead look at the median 401(k) account balance — which is the middle value if you lined up all the values in order — it’s only $87,571.
If you’re among those who are behind in saving for retirement, know that you still have some options. For example, simply delaying retiring by a few years can be a powerful move.
Don’t leave your retirement to chance. Plan carefully, and be sure to factor in healthcare costs, too.