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Average 401(k) Balance by Age

You’d be surprised how much a retirement account can grow over time. Get in early.

Written by Devon Delfino / July 5, 2022

Quick Bites

  • A 401(k) is an employer-provided retirement savings account that may come with an employer match—a.k.a. free money.
  • Your age and job tenure can have a big impact on how much you save for retirement.
  • If you feel like you’re behind on your retirement savings, there are steps you can take to get back on track.

Saving for retirement is a marathon. The earlier you start, the better off you’ll generally be. But that doesn’t mean you’re doomed if you didn’t pay your 401(k) attention when you started working.

Here’s what you should know about how much people tend to save in a 401(k), how to figure out how much money you’ll need to retire and how to catch up if you’re behind.

Inside this article

  1. What’s a 401(k) in a nutshell?
  2. Average balances by age
  3. Behind? No problem
  4. How much do you need to retire?

What’s a 401(k) in a nutshell?

“A 401k plan is an employer-provided retirement saving plan with some tax advantages,” says Cassandra Kirby, a Certified Financial Planner and wealth advisor at Braun-Bostich & Associates. “Typically there is an employer match, which is a really nice incentive.”

The employer match may be presented as a percentage of your income.[1] For example, a 100% match of up to 5% of a $60,000 salary would be a maximum of $3,000 per year. This assumes you put 5% of your income toward your 401(k), of course. Contributions are automatically put toward your account. Generally, you can deduct those contributions from your taxable income.[2] The key is that you’d have to pay taxes on that cash when you start taking money out.

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When you contribute to a 401(k), that cash is then invested.[1] For example, you may choose a target-date fund or other mutual fund product. Other than your contributions and employer matches, this is the key to long-term growth.

What are the average balances by age?

Here are the latest available figures, based on data from Vanguard:[3]

AgeAverage balance
Under 25$6,264
25 to 34$37,211
35 to 44$97,020
45 to 54$179,200
55 to 64$256,244
65 and older$279,997

You can contribute up to $20,500 per year with a 401(k).[4] If you started at age 18, that would come to $861,000 in contributions alone by the time you reached age 60. Of course, the likelihood that someone would be able to contribute that much right after high school is quite low. And it’s more likely that folks will contribute larger amounts from year to year, rather than maxing out the limit each year.

Factors like job tenure can also impact how much you’re able to save. For context, here’s how that impacts retirement savings:[3]

Job tenureAverage balance
0 to 1 year$16,047
2 to 3 years$42,964
4 to 6 years$74,143
7 to 9 years$119,673
10 or more years$303,138

These figures might look somewhat daunting. But it’s important to remember that they aren’t simply how much someone put away, out of their own pocket. It can also include things like market-based growth and employer matches.

Behind? No problem

Although there are limits on how much you can contribute to a 401(k), they are quite generous compared to other types of retirement accounts, like an IRA. So if you feel that you’re behind in saving for retirement, there is a solid opportunity to start making headway by upping your contributions. And there are other tactics that you can use to tackle it, too.

“One really important thing is that you always contribute up to the match, otherwise you’re leaving money on the table,” says Kirby. Luckily, some employers make this automatic when you’re hired, she adds—meaning you’d have to opt out, instead of having to seek it out yourself. Still, if you don’t know if you’re taking advantage of the match, it’s worth looking into.

Tip

If you’re 50 or older, you can also make catch-up contributions of up to $6,500 per year over that $20,500 cap.[5]

If you’re finding it difficult to find the money to contribute to your 401(k), making a budget can also help you figure out where you might want to cut back. And, if you can, it’s a good idea to take advantage of automation.

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“Sometimes you can enroll where every year your savings goes up 1%. It’s kind of like, set it and forget it. That can be helpful,” says Kirby. She also notes that you should revisit your 401(k) contributions every time you get a raise to ensure that your contributions scale with your income.

For those in certain income brackets, there’s also the option to make a full contribution ($6,000 per year) to an IRA:

  • Traditional IRA: Incomes up to $68,000 per year (single) or less than $109,000 (married)

  • Roth IRA: Incomes up to $129,000 (single) or less than $204,000 (married)[6]

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That way, you could take advantage of any employer match with your 401(k), while also socking extra money away for retirement in another account.

How much do you need to retire?

Like most aspects of personal finance, the amount you’ll need to support yourself in retirement can vary a lot depending on your circumstances.

“Aiming to save 20% of your gross income is a good starting place for savings,” says Kirby.

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Some of the factors she says you’ll likely want to consider when figuring out how much money you need to retire include:

  • Lifestyle: How do you want to live in retirement? Do you want to maintain your current lifestyle? If so, how much do you earn right now? Do you plan to downsize and live on less?

  • Time frame: How long do you have to let your savings grow? The longer the time frame, the more opportunity there is. Shorter time frames will be more dependent on how much you put into your 401(k).

  • Risk tolerance: How you invest your 401(k) will depend on your risk tolerance—more risk comes with the potential for greater savings, but less risk can be a good option if you aren’t willing to risk losing some of your savings.

  • Other financial goals: Do you want to pay off your mortgage by the time you retire so you don’t have that payment in retirement? Do you want to put your kids through college debt-free? These kinds of things will all factor into how much you have to put toward retirement, but they can also impact how much you’ll need.

Article Sources
  1. “Operating a 401(k) Plan.” Internal Revenue Service. Nov. 10, 2021. https://www.irs.gov/retirement-plans/operating-a-401k-plan.
  2. “401(k) Plan Overview.” Internal Revenue Service. Nov. 15, 2021. https://www.irs.gov/retirement-plans/plan-sponsor/401k-plan-overview.
  3. “How America Saves: 2022.” Vanguard. June 2022. https://institutional.vanguard.com/content/dam/inst/vanguard-has/insights-pdfs/22_TL_HAS_FullReport_2022.pdf.
  4. “IRS announces changes to retirement plans for 2022.” Internal Revenue Service. Nov. 17, 2021. https://www.irs.gov/newsroom/irs-announces-changes-to-retirement-plans-for-2022.
  5. “Retirement Topics - 401(k) and Profit-Sharing Plan Contribution Limits.” Internal Revenue Service. Nov. 5, 2021. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits.
  6. “Should You Open an IRA If You Already Have a 401k?.” SoFi. Feb. 1, 2022. https://www.sofi.com/learn/content/should-you-open-an-ira-if-you-already-have-a-401k/.

About the Author

Devon Delfino

Devon Delfino

Devon Delfino is a writer who’s covered personal finance—including everything from student loans to budgeting to saving for retirement and beyond—for the past six years. Her financial reporting has appeared in publications like the L.A. Times, U.S. News and World Report, Teen Vogue, Masha

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