Average 401(k) Balance by Age: Your Retirement Timeline
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- Published: March 2, 2022
- This page features 9 Cited Research Articles
A 401(k) retirement account is a popular and accessible savings option. It’s often the first step people take in planning for retirement. To help you see how your savings stack up, we’ve gathered the average 401(k) balance by age and tips for reaching your goal.
There’s no limit to the ways you can save for your retirement, from individual retirement accounts (IRAs) and annuities to brokerage accounts and business investments. A diverse portfolio of investments is ideal, but 401(k) accounts remain the most popular opportunity for investors. Fifty-four percent of non-retired individuals invest in a defined contribution plan, including 401(k)s and 403(b)s.
If you’ve been contributing to a 401(k) account and want to compare how your savings are growing, or if you want a better idea of how much you should invest, our median and average 401(k) balance by age timeline can help you strategize.
401(k) Balance by Age
Knowing the median and average 401(k) balances in the U.S. can provide a guide to begin retirement planning. Most Americans began saving in their late 20s and early 30s, though Gen Z recognized the value of saving early and have begun saving at a median age of 19.
|Median Balance||Average Balance|
While we highlight average defined contribution 401(k) balances, it’s important to note that these numbers don’t include other retirement investments, like IRAs.
We’ve also included recommended savings goals for each age range, so you can adjust your strategy across your retirement portfolio.
Average 401(k) Balance in Your Early 20s (<25)
Median age Gen Z begins retirement savings
A majority of young adults (62 percent) have begun saving for retirement by their 30s, though only 28 percent of this group believe their savings are on track.
Saving early offers significant benefits to your retirement planning. Even small contributions in your 20s can pay off, as compound interest helps your balance grow over a longer period of time.
Some experts recommend investing 15 percent of your income as soon as it’s feasible for your budget. If that’s not doable, try increasing your current contributions by as little as 1 percent each year to support your retirement.
Average 401(k) Balance for Ages 25–34
Median age millennials began retirement savings
By their late 20s, Americans’ average and median retirement savings have increased over 130 percent and 490 percent, respectively.
Median age Gen X began retirement savings
Increases in income come with age, which means Americans are better suited to invest significant portions of their income toward retirement.
Experts recommend saving 1x your salary
Generally, experts recommend you save the equivalent of your annual income by age 30. So if you make $60,000 a year, plan to save that dollar amount before your 30th birthday.
Average age of first-time home buyers
25% of Americans ages 30-44 had no retirement savings in 2021.Source: Federal Reserve
Average 401(k) Balance for Ages 35–44
Median age baby boomers began retirement savings
By age 44, 71 percent of Americans have a retirement account, though only 34 percent believe they’re on track to reach their retirement goals.
Experts recommend saving 3x your salary
Considering that $58,348 is the median income for this age group, many Americans fall short of the recommendation to have one year of their salary saved. Just 44 percent of their annual income is represented in a defined contribution plan.
Average 401(k) Balance for Ages 45–54
The United Arab Emirates has the youngest average and official retirement age in the world
With just 10 to 20 years until retirement age, Americans’ median retirement savings have nearly caught up to their median annual income of $59,130.
Age Americans become eligible for "catch-up" contribution limits
Savers falling behind on their retirement goals can benefit from working with a financial advisor. A professional advisor can help late-start planners estimate their Social Security benefits, retirement taxes and health costs to set accurate saving and spending goals.
Experts recommend saving 6x your salary
95% of people who have hired financial advisors say they’re worth the money.Source: Magnify Money
Average 401(k) Balance for Ages 55–64
Current retirement age for SSA benefits
By your 50s, you’re eligible for “catch-up” contributions, which increases your 401(k) annual contribution limit to $26,000.
As you approach retirement age, you also have a better idea of your retirement spending needs and can save accordingly. Start creating retirement budgets considering your realistic savings goal and spending allocation.
The estimated retirement age for current workers
Try a few budgets to see what’s comfortable for you, while allowing you to enjoy retirement without undue stress. A stricter budget can also help you increase your savings.
Average 401(k) Balance for Ages 65+
49% of workers expect to retire after the age of 65, or never retire
By age 62, seniors are eligible to receive partial Social Security benefits, while full retirement benefits kick in at age 67 for most pre-retired Americans.
Average retirement age in the U.S.
The median 401(k) balance begins to decline after age 65 — likely a result of retired individuals beginning to withdraw from their savings. Average retirement balances see a slight increase from the previous age range as many adults continue to work throughout retirement and collect interest on existing investments.
Experts recommend saving 8x your salary
Workers who choose to stay in the workforce through age 70 without collecting Social Security can enjoy increased benefits. This payout can increase 8 percent each year you delay collecting benefits.
How To Set Retirement Savings Goals
The U.S. Department of Labor recommends individuals save between 70 to 90 percent of their pre-retirement income for each year of retirement. Considering inflation, a goal of 80 percent is a good place to start.
You’ll want to determine how many years you expect to live off your retirement savings. First determine your retirement age, then estimate your life expectancy. The average life expectancy in the U.S. is 77, but you should plan for longer than that to ensure your savings won’t run out.
Once you have a savings goal and estimated years in retirement, you can divide your savings total by retirement years to return an annual retirement income. This is the estimated amount of money you’ll have to spend each year.
How Much Should You Contribute to Your 401(k)?
Experts recommend you invest 15 percent of your income into retirement savings. If you have multiple retirement accounts and your employer matches 401(k) contributions, invest as much as your employer will match to maximize the amount of “free” money you can earn. The rest of your 15 percent can be split among your other investments.
Ultimately, what you can afford depends on your pay and lifestyle, and you should invest as much as you’re comfortable contributing. When you’re younger, you can afford riskier investments that can increase your return on investment without jeopardizing your retirement.
Individuals age 50 or older can take advantage of increased contribution limits — up to $26,000 — to catch up on retirement planning.
How To Improve Your Retirement Savings Strategy
You’ll be able to best estimate your retirement needs and maximize your savings strategies with the help of a financial advisor.
Generally, your risk tolerance decreases with age. The sooner you start saving and exploring high-return investments, the more money you can save through compounding interest.
You can also explore 401(k) alternatives with a variety of risk, returns and tax benefits. Retirement accounts, including IRAs and 401(k)s, have annual contribution limits, but may allow you to defer your taxes.
Non-retirement investments like real estate or brokerage accounts don’t offer the same tax advantages, but you can invest as much as you like, and choose your investments to manage your risk and rewards.
Annuities are another investment opportunity that provides guaranteed retirement income in case you outlive your savings. You can also name beneficiaries to provide an inheritance to your surviving loved ones after you pass.
Estimated retirement needs can evolve over time, but a robust savings strategy early on provides a foundation for your investments to grow and allows you to retire on time. Understanding the average 401(k) balances by age and retirement savings milestones helps you stay on track and motivated to save.
9 Cited Research Articles
Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.
- Transamerica Institute. (2021, November). A Compendium of Findings About the Retirement Outlook of U.S. Workers. Retrieved from https://transamericainstitute.org/docs/default-source/research/2021-retirement-outlook-compendium-report.pdf
- Department of Labor. (2021, September). Top 10 Ways To Prepare For Retirement. Retrieved from https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/top-10-ways-to-prepare-for-retirement.pdf
- CDC. (2021, July). Provisional Life Expectancy Estimates for 2020. Retrieved from https://www.cdc.gov/nchs/data/vsrr/vsrr015-508.pdf
- BLS. (2021, July 26). Median Weekly Earnings by Age and Sex, Second Quarter 2021. Retrieved from https://stats.bls.gov/opub/ted/2021/median-weekly-earnings-by-age-and-sex-second-quarter-2021.htm
- Vanguard. (2021, June). How America Saves 2021. Retrieved from https://institutional.vanguard.com/content/dam/inst/vanguard-has/insights-pdfs/21_CIR_HAS21_HAS_FSreport.pdf
- Simmons, Christian. (2021, June 16). What Should Your Retirement Plan Look Like by Age? Retrieved from https://www.retireguide.com/news/what-should-your-retirement-plan-look-like-by-age/
- Federal Reserve. (2022, May). Report on the Economic Well-Being of U.S. Households in 2021 - May 2022. Retrieved from https://www.federalreserve.gov/publications/files/2021-report-economic-well-being-us-households-202205.pdf
- Delfino, Devon. (2021, March 22). Half of Consumers Think Financial Advisors Are More Expensive Than They Are, But Almost All Who Use One Say They’re Worth It. Retrieved from https://www.magnifymoney.com/blog/news/financial-advisors-cost-survey/
- Stolba, Stefan Lembo. (2020, December 15). Average Age To Buy a House. Retrieved from https://www.experian.com/blogs/ask-experian/research/average-age-to-buy-a-house/