What Is The Average 401K Contribution Rate Per Age and How Do You Stack Up?

How much are you saving inside your 401k? And how does that stack up to your peers and your same age group and how much the average person is saving inside their 401k?

Hi, I’m Troy Sharpe, CEO of Oak Harvest Financial Group, Certified Financial Planner Professional and host of The Retirement Income show.

So you really have three main decisions when it comes to your 401k when you’re in the accumulation phase. How much do I save or how much do I contribute as a percentage of my salary? Where inside my 401k do I invest those dollars, the pre tax part or the Roth 401k part? And then how do I invest those dollars?

So first thing we’re going to tackle in this video is how much should you be saving, how much are your peers saving, so you have an idea of where you stack up. Okay, so the average contribution rate per age in this country into the 401k, from 20 to 29 years old is 7%. This is actually pretty good.

And from 30 to 39%, or 30 to 39 years old, it goes up to 8%. I’d like to see a little bit bigger jump from the 20s to the 30s.

Then when we get here to 40 to 49 year olds, we really need to see a bigger jump here. So the average contribution rate is about 8% of their salary for people in between 40 to 49 years of age. Once we get into our 40s, we’re further along into our career, most likely, we’re making more money, usually, we really need to see this contribution rate increase up to the 10 to 15% range here, getting in between that 10 to 15% range in this age bracket can go a very, very long way towards giving you a more secure retirement whenever you decide to stop working.

The numbers go up from 50 to 59, to 10% of salary and then 60 to 69 to about 11% of the salary. So here we really need to see these age groups, they should be contributing somewhere between 15 to 20% of their salary, or getting close to maxing out whatever that number is, the most amount that they can put into the 401k. So I’d like to see these between 15 to 20%, at least 12, 13, 14 15% in that range. And what this means is of course, the more you contribute, the more likely you are to have a secure retirement, which means more income, it means doing the things that you want to do in retirement.

And the next video I’m going to go through I’m going to talk about financially or mathematically what is the difference between contributing 6% of your salary versus contributing 9% of your salary into the 401k, because when we look at the time value of money, which is the value of your money and how much it earns over time, comparatively speaking, 6% versus 9%, we’ll see a pretty big difference in the ending balance of these accounts.

So make sure to hit that subscribe button, make sure to hit that thumbs up and share this video with a friend or family member so they know where they stack up when it comes to saving for retirement.