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The Average 401k Balance By Age

401ks are one of the most common investment vehicles that Americans use to save for retirement. For most of us, the 401k is an employer-sponsored plan that allows you to save for retirement in a tax-sheltered way (up to $19,000 per year in 2019) to help maximize your retirement dollars.

If your employer offers a 401k and you are not utilizing it, you are likely leaving money on the table – especially if your employer matches your contributions. While the 401k is one of the best available retirement saving options for many folks, only 32% of Americans are investing in one, according to the U.S. Census Bureau. That is staggering given the number of employees who have access to one (59% of Americans).

We are constantly being reminded that there is a retirement crisis in America — according to a Personal Capital-sponsored study conducted by ORC International, nearly two in five (37%) pre-retirees have no money saved for retirement. While a majority of Americans (63%) with full-time or part-time employment participate in an employer-sponsored retirement program, just 21% max it out.

So what does this mean in terms of how much people actually have saved in their 401k plans, and how does this stack up against what they could have saved if they were maxing out their 401k’s every year?

How are you tracking towards your retirement goals? Using Personal Capital’s free Retirement Planner tool, get a percent chance of your success at achieving the retirement you want. Learn more about Retirement Planner here.

401k Savings Potential by Age

The following chart depicts 401k savings potential by age, based on several assumptions. It can be used as a guide for your total retirement savings amounts, including your IRA, Roth IRA, and after-tax savings. While it’s designed for one person, it can also be used as a guide for a married couple if one spouse decides to no longer work.

Other assumptions include:

  • The numbers are more forward-looking vs. backward, since 401k contribution limits were lower in the past (in fact, this year, the limit was raised $500 from 2018).
  • You start full-time employment at age 22 at a company that provides a 401k, without a company match.
  • You contribute $8,000 to your 401k after the first year, then from the second year onward, you contribute the maximum annual amount of $19,000.
  • The “low end” column shows what you could potentially have in your 401k after so many years of a constant $19,000-per-year contribution and no growth.
  • The “high end” column shows what you could potentially have in your 401k after so many years of a constant $19,000-per year contribution, but assumes 8% growth* compounded over the next 43 years. The numbers have been rounded up and assumes monthly contributions at the end of each month.
AGE YEARS WORKED LOW END HIGH END
22 0 $0 $0
23 1 $8,000.00 $19,000.00
24 2 $27,000.00 $41,040.00
25 3 $46,000.00 $64,843.20
30 8 $141,000.00 $215,658.59
35 13 $236,000.00 $437,255.87
40 18 $331,000.00 $762,854.97
45 23 $426,000.00 $1,241,266.88
50 28 $521,000.00 $1,944,210.93
55 33 $616,000.00 $2,977,066.37
60 38 $711,000.00 $4,494,669.85
65 43 $806,000.00 $6,724,527.26

*Generally, financial planners say the expected rate of return for a 401k is between 8% and 10%.

Note: There is no average by age because the largest 401k administrators generally only throw out one number: the average 401k balance across all their user accounts. This chart reflects the suggested balances by age for a healthy retirement that is not dependent on others.

So, how do you stack up? Are you on the high end? The low end? Do you think these numbers are realistic?

Breaking it Down: Where Do You Fit In?

There are many reasons you might think this chart seems totally reasonable, or, conversely, totally unreasonable. And that’s understandable. Life presents us all with different challenges – we have unexpected medical expenses, decide to go back to school, or have kids and want to pay their college tuitions. These are all perfectly valid excuses as to why you might be falling behind where this chart says you should, or could, be.

Based on this chart, you would think that most Americans should be retiring as multi-millionaires at age 65. This probably seems way off-base, and in reality, it is — most people retire with very little in the way of savings and investments. The point is that this chart shows what is possible if you are disciplined and strategic about your 401k savings.

If you are on the younger end of the ages shown on the chart, you may be daunted at the prospect of contributing $8,000 per year to your 401k, not to mention $19,000. Depending on where you live, what your first-year salary is, or whether you are paying off student loans can make it difficult for this contribution to seem realistic. It’s crucial, however, to recognize the importance of saving as much as you can for retirement as early as you can.

To illustrate why retirement saving should be a top priority in your monthly budget, let’s think about the implications of this chart for when you are 65 years old, you no longer want to save, and are about to retire. The question then becomes: “Do I have enough saved to retire comfortably?”

So, let’s determine, based on the high and low ends of the potential savings chart, whether these figures may be sufficient to support your lifestyle for the rest of your retirement.

The average life expectancy for men is 84.3 years old, and 86.6 years old for women. Taking the numbers at the low and high end of the chart, divide by 22 (the approximate number of years you might expect to live if you retire at 65), and you get $36,636 to $305,660 to spend for the rest of your life. If you add maximum Social Security Benefits ($33,084 assuming you retire at age 65 in 2019), you may increase your take home amount to $69,720 to $338,744 per year. This may seem like quite a bit, but remember, inflation can throw a wrench into this and make your money less valuable in the future. Additionally, Social Security benefits may decrease or be gone altogether by the time Millennials and Gen-Zers retire.

Maximum 401k contribution limits were lower in the past, so this chart is likely on the aggressive side, but it is a high-level example of what is possible, and it’s important to have benchmarks against which to measure your retirement readiness.

Assumptions vs. Reality

Hopefully, you find yourself somewhere on the “potential savings” chart, but if you don’t, you are not alone. Take a look at this chart showing the actual estimated average 401k balance by age:

AGE AVERAGE 401K BALANCE
<25 $4,154.00
25-34 $22,256.00
35-44 $61,631.00
45-54 $116,699.00
55-64 $178,963.00
65+ $196,907.00

*Source: https://pressroom.vanguard.com/nonindexed/How-America-Saves-2017.pdf

The average Personal Capital user is ahead of the curve when it comes to 401k savings, but they too fall below the projected savings chart:

AGE AVERAGE 401K BALANCE
22-24 $12,334.00
25-34 $38,167.00
35-44 $99,564.00
45-54 $176,930.00
55-64 $247,169.00

*Note: Averages are rounded up to the nearest dollar.

It’s no secret that Americans are hugely underprepared for retirement. Vanguard reported at the end of 2016 that the average 401k balance was $96,495, which is clearly far below the $230,000 to $444,800 on the savings potential chart for someone aged 35 (the average age of an American).

In our recent retirement survey, we found that nearly two in five pre-retirees (37%) have no money saved for retirement. This is even more alarming when considering another finding of the study: 54% of Americans believe they will need more than $1 million to retire comfortably, and half of pre-retirees (51%) want to retire at age 65 or younger. Finally, 33% of working-age households do not own any retirement account assets — 401k or otherwise — and 56% of households have less than $10,000 saved.

Needless to say, many people are falling way below their savings potential. But the good news is, it’s not too late to turn things around.

5 Steps to Take Now to Improve Your Retirement Readiness

  1. Save early, often, and aggressively. Yes, saving is hard. It’s hard when you are young and not making a large salary, and it’s hard when you’re older and big life expenses get in the way. However, the biggest threat to your retirement is inaction. Even if it’s uncomfortable to max out your 401k, do it if you can. If you get a salary raise, immediately put 50% of it towards savings if you’re able. The earlier and more aggressively you can save, the better off you will be, and you may even surprise yourself with how much you are able to put away. Compounding can do wonders when there is a positive annual return as you can see from the high end of the potential savings chart, so the earlier you can save more, the farther your money will go.
  2. Don’t rely only on Social Security. Based on Personal Capital’s recent retirement survey, we found that a quarter of Americans expect Social Security to be their primary source of income during retirement. With half of Americans (51%) planning to retire at 65 or younger, it’s crucial to save in other investment vehicles, such as a 401k, in order to maintain your desired lifestyle in retirement. According to the United States Social Security Administration, Social Security is on track to be depleted by 2034, at which point they will begin paying a portion of the benefits from ongoing tax revenue. Don’t rely solely on Social Security; it may not fully be there when you retire!
  3. Have a realistic understanding of when you want to retire. Having clearly defined goals will help you determine how much you should have saved based on your personal goals. Your savings objectives will be different if you plan to retire at 50 than if you plan to continue working past 70. Additionally, it’s important to determine as accurately as you can what your cost of living will be in retirement. How much do you need to spend per year to maintain the lifestyle that you want for the rest of your life? Have a good sense of what your costs will be so you can factor that into your overall retirement strategy. Really evaluate how long you want to continue working, and what retirement age is realistic for you based on your income and your current level of savings.
  4. Develop other sources of income. Think about other ways you can secure sources of income in retirement outside of collecting Social Security and withdrawing from your 401k. This will not only prevent you from having all your retirement eggs in one basket, but it is also something to consider if your 401k balance is lower than you’d like. Where can you invest and how can you optimize your portfolio for greater returns? Consider other ways you can supplement your retirement income, and speak to your financial advisor about what solutions could work for you.
  5. Leverage all the resources at your disposal. There are many tools available to help you understand your financial life in more detail, and when these tools are so readily available, not leveraging them can result in a huge blind spot when it comes to your finances. Simply having this information will help you understand if you are on the right track, and how to accelerate your progress on your retirement goals. If working with a financial advisor is an option for you, this can be an invaluable resource, especially as you get closer to retirement. A financial advisor who has your best interest in mind can help you strategize and address potential gaps in your savings and retirement income plans.

Sign up for free financial tools to see all of your accounts in one place and get an accurate sense of your net worth.

Our Take

The point of this savings potential chart is not to discourage anyone if you, like many of your fellow Americans, do not fall somewhere in the defined 401k balance range. It is more to show you what is possible. Yes, you should try to max out your 401k every month, and beyond that, you should try to save in other ways as well. Even if you don’t think that’s possible for you, striving towards these goals and contributing as much as you can will get you closer to your targets than if you were to contribute very little or nothing at all.

Having a good understanding of where you are spending and saving, and having a holistic sense of what your lifestyle costs is crucial to your overall retirement planning objectives. If you feel overwhelmed by the prospect of saving for retirement, this is the first step that you can take towards getting a handle on your retirement planning. And you can do it today.

Contact a Financial Advisor


This article was updated with 2019 contribution limits on 2/4/2019.

*Disclaimer: The information on this website is for informational purposes only and does not constitute a complete description of our investment services or performance. No part of this site nor the links contained therein is a solicitation or offer to sell securities or investment advisory services, except where applicable in states where we are registered, or where an exemption or exclusion from such registration exists. Third party data is obtained from sources believed to be reliable. However, PCAC cannot guarantee that data’s currency, accuracy, timeliness, completeness or fitness for any particular purpose. Certain sections of this commentary may contain forward-looking statements that are based on our reasonable expectations, estimate, projections and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not a guarantee of future return, nor is it necessarily indicative of future performance. Keep in mind investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

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442 Comments

  1. GJ

    “only about 31% of the labor force participates in a 401k”… so what are the other 69% of us supposed to do? I’m 31 years old and have only had one employer who offered any type of 401k and the matching was pretty minimal. Unless you work for a major corporation who still offers this stuff or are bringing in 70k+/year we’re all screwed.

    Reply
    • Financial Samurai

      Save after tax money, consider a IRA, a ROTH IRA, or other investments.

      You can’t believe you are screwed. Because if you do, then you are.

      Reply
  2. Ben

    and now I feel behind

    Reply
    • Financial Samurai

      Hope it gives you motivation to get ahead!

      Reply
  3. DellStator

    As some said
    90% of Americans can’t max out savings
    50% of Americans earn the median or less, 50G a yr, which has been dropping yearly for years now, and can’t save even 5% of their income – espeically if they have a family or help care for parents.
    Anyone with more than $200,000 in savings is in the top 10%, so stop boasting how good you are at saving, you are in the top 10% of earners, that makes it easy.
    Anyone who thinks you can live anyplace in the US and not have a car (except NYC, with a 24 extensive mass transit system) is delusional – how would you get to work!
    Saving it great, but not a reality for most Americans.
    Saving enough for retirement, meaning 500G or more, is possible only for the top 10% of Americans.
    Lets stop beating up people for not doing what is impossible.

    Reply
      • mrkillagram

        wow.. so according to your chart I’m supposed to ride a bike to work 30 miles one way.. you are definitely entertaining if not delusional..

        Reply
        • Financial Samurai

          What’s wrong with a bus, train, or scooter? Or how about car pooling? Why not live closer to where you work?

          Reply
          • Bernie

            One word (and it is one word):

            ExxonMobil

            My AVERAGE salary over 23.5 years employment there was only $46,000. Their stock, with dividends reinvested, 6-10% of my own contributions over 23.5 years, plus 7% Company Match, had me over $500,000 in 2007 (at age 43), before the crash.

            The price per share is now slightly over $100 per share, and if I did not have to sell some shares ($123,000 worth) to stay financially “afloat” for 3 years while unemployed; my 5,400 shares would now be back to $545,000.

            With the “Rule of 72” as a guide, by the time I am 64, in 14 years, at 10% AVERAGE growth, those shares would turn into over $2.1 million dollars.

            I now get the opportunity to invest my money (in lesser amounts) on stocks that return a higher annual yield, so I should be able to make up the REAL, not paper, losses and maybe end up with MORE for retirement.

            NOTHING IS GUARANTEED but death and taxes (and maybe Obamacare…).

            Of course, I will retire by then, but you get the drift. One always SHOULD diversify, but I believe if something bad happens to ExxonMobil stock, you have got much more serious issues to deal with than retirement.

            I BET that “mrkillagram” also can’t wait for his paltry social security handout, because he believed leftists who told him that the stock market is “too risky”.

            WHERE DO YOU THINK MANY PENSIONS WERE INVESTED? It’s just that much of the gains were skimmed off the top from the employees’ accounts before they were told how much they WOULD GET as DECIDED by somebody UNKNOWN to the deserving WORKER.

            No thanks, I want to be IN CHARGE of my money, GAIN or LOSS…

    • Billy

      “Saving it great, but not a reality for most Americans.Saving enough for retirement, meaning 500G or more, is possible only for the top 10% of Americans.Lets stop beating up people for not doing what is impossible.”

      It doesn’t have anything to do with beating people up or doing the impossible. When you have no other choices, you do it. If you have to take a 2-hr bus ride to work each way and eat boxed macaroni and use the internet at the library and give up your cell phone, you do it. If you don’t do it, you’re going to be very poor when you’re old and working at a menial job until you can’t physically do it any more, then live off of the charity of others. It’s your choice. Either save now or pay later. Nobody is going to help you. You have to help yourself, and the sooner the better. That’s life.

      Reply
      • Financial Samurai

        “Nobody is going to help you” and “Nobody is going to save you” is the mentality I’ve taken ever since graduating from college.

        I knew I couldn’t last in finance forever, so I saved like a mad man in my 20s (50%+). My first year in Manhattan I made $40,000 and shared a studio with my HS friend. I didn’t care b/c I was working all day, and it was just like being back in college.

        Save now or pay later indeed. Or save now and enjoy financial freedom later.

        Reply
    • jp

      we have well above $200K in our 401k and we are so absolutely not even close to the top 10% earners. We started early, blue collar worker but we sacrificed thru the years. We drive 10+ year old cars, budget for extras that we want rather than charging, live in an affordable home and keep our furniture rather than always updating. We save first and live off of what’s left. Sometimes have to pinch pennies and can’t go out for that nice dinner but now that we’re in our 50’s we know that we’ll be able to enjoy retirement while a lot of our friends who’ve been living the high life all these years, will be struggling on their SS and retirement savings. If you have a 401k available start utilizing it right away and max out…it’s a wonderful saving tool.

      Reply
    • Paul Doherty

      “50% of Americans earn the median or less, 50G a yr”

      Exactly – and remember that 51K median is HOUSEHOLD income, which is usually two earners. Which implies that the median individual income may be around 23k-30k a year. So 50% of earners are below that amount.

      Reply
  4. Aces

    I think you may be focusing on the wrong thing here. The amount of money I need in my combination of 401k, IRS’s, & other investments, need to match what I will need to live on in my retirement years. Looking only at the 401k limitsimplies whoever set those limits must know what we each need to live on.

    If someone has paid off there mortgage and any other debts by the time they retire, they may not need as much income as someone who will be still paying on those debts. And the realitiy is that those who set aside more money, will be able to do more “fun things” in there retirement years. I would like to travel. But if the money isn’t there I won’t. If there’s plenty, I may do an anual vacation involving air travel. But I could just as easily do that every 5 years and go car camping in the in-between years.

    So what I’d really like to see is info on how to gage what I will need based on my current lifestyle. Let me clarify that. If I am putting 25% of my income into a 401k, and I am paying off my mortgage at an accelerated rate (so I’ll be debt free at retirement), Then I should be looking at an adjusted income, that removes the money I’m paying out for these things. Then I need to look at what higher expenses I may see. What jumps tyo mind is if i have more time on my hands, would i do activities that cost more then what I pay out now? and there’s always the question of health care and insurance.

    It should be possible to make some charts where we can adjust what we make now, by the factors I mentioned above, and then display what I’d need saved to continue to live that lifestyle.

    Reply
    • Financial Samurai

      I welcome your attempt to create a chart to fit your needs and what you think is right. Just shoot me an e-mail.

      Personal finance is personal. There’s no one size fits all. This post is just trying to provide some guidance for those wondering how much they should save or whether they think they are on track or not.

      Reply
  5. Terry

    One of the best ways in my opinion to grow your IRA, is by converting it to a Self Directed IRA and investing in real estate and or houses.

    Many people dont know about this angle because their financial advisor doesnt get to “sell” their investment products.

    But you can take your IRA and create mortgage notes and more earning 6-10% interest easily on real estate deals.

    This is a technique not to be used by people who have no self control or good spending habits, but if you are savy and strict, this is a great way to create wealth.

    If anyone has questions you can visit our website FindFundandFlipDeals.com or email at troyce1 at gmail dot com.

    We have done many of these types of investments with investors.

    Some of the companies that do them are Equity Trust, and Security Trust to name a few.
    Id be interested to hear what others have to say.

    Reply