Treating Cardiac Edema
Average 401(k) Balance By Age In 2024: Benchmarking Your Retirement Savings
Paid non-client promotion: Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate investing products to write unbiased product reviews.
A 401(k) account is an employee-sponsored retirement vehicle that allows you to contribute pre-tax income toward your retirement. As one of the best retirement plans for US employees, a 401(k) lets you reduce the amount of income you're taxed on and lets your funds grow tax-free.
Every year, Vanguard analyzes account data from millions of retirement accounts in a report titled "How America Saves."
Knowing the average 401(k) balance by age group and income level can help you determine how much you need to retire. Here's the average 401(k) account balance based on age in 2024.
Understanding the average 401(k) balance in 2024According to Vanguard's annual data report, the average 401(k) account balance in 2024 was $134,128, an increase from 2023's average balance of $112,572.
Across these accounts, the typical account balances vary widely by the method used to calculate it — while the average 401(k) savings balance is well over $100,000, the median account balance is much less at $35,286, according to Vanguard's latest data.
The Vanguard data is broken down by demographics, showing a wide range of average account balances across various age ranges, income levels, industries, and genders. Here's a breakdown of those balances.
Average 401(k) balance by ageRetirement savings grow with compound interest, which means account balances increase with time. Like other types of retirement accounts, money saved in a 401(k) grows like a snowball, with interest earning interest on itself. The older you are, the more time you've had to build up your savings.
With compounding interest, the earlier money is put into an account, the more opportunity it has to grow and the greater the possible returns. In retirement accounts like 401(k)s, building retirement savings early means a greater opportunity for growth.
In 2024, employees can contribute up to $23,000 in their traditional and Roth 401(k). Folks aged 50 or older can contribute an additional catch-up contribution of $7,500 in 2024.
According to Vanguard, here's the average amount people have saved for retirement by age group.
Check out Personal Finance Insider's retirement calculator to see how much of your annual income you can afford to put away.
Planning for Retirement with a Financial Advisor
Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three fiduciary financial advisors that serve your area in minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. Start your search now.
Ages 20-29: Laying the foundationMost 20-year-olds are just starting to contribute a small amount of money toward a 401(k) or equivalent retirement plan. Between lower salaries, rent payments, student loans, and other living expenses, younger individuals typically can't contribute much toward retirement. But that's okay as folks in their 20s have time on their side.
Contributing a little here and there is better than nothing at all.
Ages 30-39: Building momentumPeople in their 30s often have increased financial freedom to put more money toward retirement. Contributions should be increasing annually. However, you may be distributing funds between different savings and investment accounts if you're planning for other big life events like having kids or buying a home.
This a good time to make calculated risks, as you still have time to recover from larger losses.
Ages 40-49: Mid-career financial growthFolks in their 40s should be contributing a much larger portion of their income toward retirement. Aim to maximize your contributions and take full advantage of employer benefits like 401(k) matches. Start shifting your investment portfolio to a more conservative risk tolerance so that a larger percentage of your money is invested in low-risk bonds and other fixed-income securities.
Ages 50-59: Preparing for the transitionAs you near retirement age in your 50s, take advantage of catch-up contributions, maximize your 401(k) savings, and avoid high-risk investments. Finalize your retirement goals and continue storing as much as possible in a retirement account.
You might also consider adjusting your retirement timeline. Pushing back your retirement date allows you to put more of your employment income aside for retirement and may increase the amount you receive in Social Security benefits.
Quick tip: Employees age 50 and up are eligible to contribute an additional 401(k) catch-up contribution. Catch-up contributions can significantly boost your retirement savings, especially if you had a late start.
Ages 60 and up: Finalizing the retirement strategyAdjust your investment portfolio as needed, and make sure you understand the tax implications of withdrawing funds. Depending on your retirement account type (traditional or Roth), you may have to pay taxes on your withdrawals. Moreover, your portfolio should be adequately adjusted for stability and should provide a steady source of reliable income.
Average 401(k) balance by income levelVanguard's data shows that 401(k) balances are greatly influenced by annual income. Across all age groups, the amount people save for retirement increases with their earnings. However, households with a higher annual income had lower average and median 401(k) balances than in previous years.
Here's the annual income compared against the average 401(k) balance and median 401(k) balance:
Here's the annual income compared against the average 401(k) balance and median 401(k) balance:
Average 401(k) balance between men and womenOn average, men save more for retirement than women.
Across all age levels, Vanguard's data indicates that women have a median 401(k) account balance of just over $11,099 less than men's.
A 2023 report from the Bureau of Labor Statistics shows that the average woman makes around 86 cents for every man's dollar, which affects how much women can put away for retirement.
While a large disparity in savings exists, women often need greater retirement savings than men to retire comfortably. Women tend to live longer and, therefore, need more long-term care than men, which could require greater spending in retirement.
Average 401(k) balance by industryBalances also vary widely among industries. One possible explanation is that employer match benefits, in which an employer matches an employee's contributions to their savings up to a given percentage, may be more common in some industries than others. Earnings could also affect how workers in a specific industry save.
Here's how the average balances break down by industry.
People who work in agriculture, mining, and construction contribute significantly to retirement, with the average industry worker's account balance well over $180,000. However, teachers, healthcare workers, and people who work in wholesale and retail tend to lag behind, with average account balances under $97,000.
Enhancing your 401(k): Strategies for success 1. Start early, contribute oftenTime is a crucial part of financial planning for retirement. Contributing money toward retirement savings allows compound interest to work magic and combat inflation. Even modest contributions can grow into significant savings over time when deposited regularly.
Ideally, you'll be able to contribute more as your salary increases and your financial situation improves. However, ensure not to over-contribute and lose access to money you'll need shortly. Setting aside cash in an emergency fund is a great way to avoid a 401(k) early withdrawal before your 59 1/2.
2. Take advantage of employer-match benefitsA common benefit with 401(k)s is an employer match benefit, and it's essentially free money. Employers can match a dollar-for-dollar or partial match of an employee's retirement saving contributions. If you can swing it, contribute enough to unlock your employer's full contribution amount and hit your retirement saving benchmarks.
Under the Secure 2.0 Act, employers can now offer a student loan match to their employees' retirement savings plans when they make qualifying student loan payments.
Quick tip: Vesting signifies that an employee has fulfilled specific criteria to claim ownership over a designated portion of their retirement savings. This may take up to three to five years. Employers may also contribute a matching amount to an employee's yearly savings (up to a predetermined limit). Once an employee reaches a 100% vested status, they possess complete ownership of the accumulated funds in their 401(k) or similar retirement plan.
3. Diversify investmentsDiversifying your investment is key to managing risk and volatility in your portfolio. Investment diversification in a 401(k) may also boost growth by getting exposure across multiple market sectors and different kinds of assets.
You can easily diversify your investment portfolio by investing in different stocks, bonds, ETFs, mutual funds, and alternative investment options like real-estate and commodities.
4. Mind the feesHigh management fees can erode your savings over time. Pay attention to the fee schedules and manage 401(k) fees in your plan by investing in low-cost funds like ETFs. If you have an old employer's 401(k) plan, consider rolling over the assets into a new IRA because IRAs vs 401(k)s offer lower fees and more investment opportunities.
5. Regular rebalancingAs the market fluctuates, so will the composition of your investment portfolio. Your age and proximity to retirement also influence how your portfolio should be allocated. Regular rebalancing is key to keeping your investments on track and maximizing your 401(k) contributions to reach your goals and stay aligned with your risk tolerance.
Average 401(k) balance FAQsHow much you should save in your 401(k) varies by age. You should aim to save 1x your annual salary by 30, 3x by age 40, 6x by age 50, and 8x by age 60. The best way to reach these age markers is by starting early, consistently contributing, and adjusting based on income, lifestyle, and retirement goals to ensure financial security.
The average 401(k) balance varies by age. Generally, individuals under age 25 have around $7,000 in retirement savings, and individuals between 25 and 34 have around $37,000 in retirement savings. People aged 55 and 64 have around $244,000.
Your 401(k) is your futureA 401(k), 403(b), or other retirement plan is more than a savings account. Retirement savings plans are a wealth-building tool to ensure a comfortable, secure, and stress-free retirement. By understanding how age, income, and gender impact your retirement savings, you can make better-informed decisions that align with your demographic and investment goals.
But you'll need a well-thought-out financial plan before you can reap the rewards of your retirement savings. Consult a financial expert like a fiduciary or CFP for professional management and guidance.
Tessa Campbell
Investing and Retirement Reporter
Tessa Campbell is an investing and retirement reporter on Business Insider's personal finance desk. Over two years of personal finance reporting, Tessa has built expertise on a range of financial topics, from the best credit cards to the best retirement savings accounts.ExperienceTessa currently reports on all things investing — deep-diving into complex financial topics, shedding light on lesser-known investment avenues, and uncovering ways readers can work the system to their advantage.As a personal finance expert in her 20s, Tessa is acutely aware of the impacts time and uncertainty have on your investment decisions. While she curates Business Insider's guide on the best investment apps, she believes that your financial portfolio does not have to be perfect, it just has to exist. A small investment is better than nothing, and the mistakes you make along the way are a necessary part of the learning process.Expertise: Tessa's expertise includes:Paul Kim
Senior Associate Editor at Personal Finance Insider
Paul Kim is a senior associate editor and personal finance expert at Business Insider. For over two years, he has edited and reported on various personal finance subjects, from financial crimes to insurance. ExperiencePaul currently leads Personal Finance Insider's insurance coverage. He breaks down complex insurance topics and reviews insurance companies so readers can make an informed choice. Previously, Paul led PFI's credit score coverage, writing and editing stories debt, improving your credit score, and protecting your credit report.Before joining Business Insider in 2022, Paul reported on local restaurant, retail, and real estate developments in Metro Atlanta. He was also the managing editor of his college newspaper at NYU. He also spent some time as a boba shop barista. Paul believes in a reader-first approach to service journalism, addressing the questions readers need answering and writing stories that understand that personal finance isn't one-size-fits-all. As a personal finance editor in his 20s, Paul recognizes how deeply smart financial decisions will impact members of his generation is eager to uncover the mysteries of personal finance to help his readers succeed. ExpertisePaul's list of expertise includes:
Comments
Post a Comment