Average 401 (K) Balance By Age- Where Are You At?
Jason Jacobson
Connecting B2B sales teams with key decision-makers in their target market, to deliver meaningful and authentic initial sales conversations to drive revenue growth for the business
How much have you saved for retirement? See how your total stacks up.
When you’re setting your financial priorities, it’s important to set money aside for retirement. Though it may be years — or even decades away — starting early is one of the best ways to ensure you’re able to retire comfortably.
The 401(k) is one of the most popular retirement savings tools. Many employers offer this type of plan, helping their workers save for the future in a tax-advantaged way. If you’re currently saving in a 401(k) or are considering doing so in the future, keep reading to learn more about how these accounts work, rules to be aware of, and your other retirement savings options.
What is a 401(k) plan?
A 401(k) plan is a qualified retirement plan that’s offered by many private-sector employers in the United States. It’s named after the section of the Internal Revenue Code that authorizes it. It allows workers to defer a portion of their current wages and invest those dollars for retirement.?
401(k) plans offer several key advantages, including short-term and long-term tax savings. However, they also come with several restrictions in terms of their contribution limits, and withdrawals.
Contribution limits
Each year, the IRS sets a maximum contribution limit for participants. The limit generally increases every year or every few years based on inflation.
In 2024, workers may contribute up to $23000 to their company’s 401(k) plan. Workers aged 50 and older may also make what’s called a catch-contribution of $7,500, meaning they can contribute a total of $30,500.
In many cases, an employee’s contributions are based on a percentage of their salary. For example, someone might set up their contributions so that 10% of their salary is automatically withheld from their paycheck and deposited into their 401(k) plan.
If your goal is to max out your 401(k) plan for 2024, it’s important to run the numbers to determine how much you must contribute. You can contribute the maximum of $23,000 by doing any of the following:
In addition to the individual contribution limit, there’s also an overall limit on contributions, which applies to employee deferrals and employer matching contributions. The overall contribution limit for 2024 is either $69,000 or 100% of an employee’s compensation, whichever is lower.
Ages 20-29
Average 401(k) balance: $11,600. Median 401(k) balance: $4,000.
Many of the participants in this age group are new to working and new to saving for retirement. Yet even at this young age, it’s important to prioritize contributing to your workplace retirement plan, especially if your employer matches a portion of your contributions.
Still, general recommendations suggest aiming for a retirement balance equal to between half and all of your annual salary by age 30. This group may be falling short of that, though these numbers don’t reflect what they may have saved elsewhere, in individual retirement accounts like Roth or traditional IRAs.
Ages 30-39
Average 401(k) balance: $43,600. Median 401(k) balance: $16,500.
At this point, whether measured by the average or the median, participants have increased their balances roughly fourfold.
One point that becomes increasingly important as participants age: Fidelity’s analysis treats each account separately, which means balances aren’t aggregated by account holder and then averaged. As people age and spend more time in the workforce, they’re more likely to hold more than one 401(k), especially if they’ve changed jobs without rolling over or combining accounts.
Ages 40-49
Average 401(k) balance: $106,200. Median 401(k) balance: $36,900.
Another solid jump by this age range, with both figures more than doubling — the last time we’ll see a percentage jump that large between age ranges. That’s likely at least partially a product of peak earning years:
Ages 50-59
Average 401(k) balance: $179,100. Median 401(k) balance: $62,700.
This group has hit the age at which catch-up contributions are allowed by the IRS: Participants age 50 and older can contribute an extra $6,000 a year in 2019. That can be a helpful Hail Mary for those feeling behind at this point, assuming that extra cash is available to put toward retirement.
Ages 60-69
Average 401(k) balance: $198,600. Median 401(k) balance: $63,000.
Growth has slowed here, likely due to the fact that the latter half of this group may actually be drawing down their 401(k) balance to start spending the money they’ve accumulated. IRS rules allow 401(k) distributions to begin at age 59?, though many people don’t retire until later:
What you can learn from the average 401(k) balance
Again: not much. This is a fairly arbitrary benchmark. In the aggregate, it can speak to how workers in general are doing when it comes to saving for retirement, but it does little to help you analyze your own situation. It’s also limited to people who have a 401(k); many workers don’t.
A better approach to benchmarking your efforts: A retirement calculator which will give you a more personalized recommendation for how much you should have saved now, and how much you’ll need at the end of the line.
Finally, it’s worth noting that you may or may not want to put all your retirement eggs into a 401(k) basket. Once you’ve earned your employer match, there can be benefits to spreading your money around among other retirement accounts, such as an IRA.
Key takeaways