What’s The Average 401K Balance by Age and How Much Should You Be Saving For Your Retirement

What’s the average 401(k) balance by age in this country? How do you compare to others? And how much should you be saving each year for retirement?

Hi, I’m Troy Sharpe, CEO of Oak Harvest Financial Group, CERTIFIED FINANCIAL PLANNER™ Professional (CFP®), and host of the Retirement Income Show.
When it comes to saving for retirement, many of us are in the dark. We don’t know how much we should be saving and, also, we don’t know how much other people have. Are we on track? Are you behind? Where are you at? And what should you be doing to pick it up, so you have more money in retirement?

And all money is: it’s a resource. It allows you to do the things that you want to do, to have the freedom to decide or: not worry, I should say if you go on vacation, should it be for five days or can you go for 14 days? Should you stay in the luxury resort, or should you stay in the three-star Best Western motel?

So having money in retirement simply means you have more freedom and more comfort and peace of mind when it comes to doing the things that you want to do.
So, let’s find out if you’re on track. And, if you’re not on track, what you can do to pick it up so you have more money, more choices, more flexibility when it comes time to stop working.
So, the average 401(k) balance by age. So, these numbers come from Fidelity. And Fidelity tells us that, in 2018, a record number of 401(k)s hit millionaire status. You may not have a million dollars. And don’t feel bad if you don’t: Most people who hit the million-dollar status are in their 60s: 64, 65, 67 years old and they’ve been contributing for a very long time.

But it tells you that if we contribute to our 401(k) and we allow the power of compound interest (and) the power of the markets to allow our contributions to grow, if we take advantage of the money that our employers are matching, [then] we can attain a large amount of money in retirement. But we have to be diligent about saving, and we have to be consistent with staying on top of what our 401(k) is invested in.

Now, if you are in your 20s So, in your 20s, you don’t have most likely a ton of money to be saving for retirement. You’re just getting started in your career, so don’t worry about it too much. But, if you can, try to save as much in your 401(k) to at least get your company match. If you don’t have a 401(k), try to start socking some money away to at least get three to six months of expenses in an emergency account and get that money invested so it’s earning interest for you. But, the average 401(k) balance is around $11,800.

If you’re in your 30s, the average 401(k) balance is $42,000. So, when you’re in your 30s, you’re probably a little bit farther along into your career further along into your career. And we want to make sure that we are definitely contributing to some type of retirement savings whether it’s outside of the 401(k) because you don’t have one, or inside the 401(k), getting your company’s match trying to put as much as you can into that account.

In your 40s, the average balance is $102,000. In your 50s, the average balance is $174,000. And in your 60s, the average balance is $195,000.
So, whatever amount of money we can save, we should be saving that. But as a rule of thumb, what I like to see people doing is somewhere around 15% of their income. If we can be saving 15% of our income, [then] we’re going to be on track to getting a decent amount of savings at least relative to what we’re taking home.

Now, make sure to watch my video, Know your Numbers. Because, if you know your numbers, you’re going to have a much better likelihood of being able to contribute to your retirement and stay on track.

Most people go through life and they have no idea what their take home pay is this is after deductions and withholding and FICA and everything else. And, also, what they’re spending that’s the biggest thing. Most people don’t know what they’re spending, so you are going to be better than that. You are going to know how much your take home pay is and you’re also going to know how much you’re spending.

When we understand those two numbers, then we can say okay, I have this much room in my budget to chop off possibly. So, I can contribute to myself, [and] we have to pay ourselves first. And when you do that, that’s the 15% that I want to see you socking away for retirement. If it’s 7%, 8%, that’s fine. If 20% and 25% is what you can do, even better, but let’s try to get around that 15% number so we can save as much as possible so we can have the freedom later in life to do the things that we want to do.

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