Are you wondering if your 401(k) balance is where it should be at this time in your life? Are you unsure if your 401(k) funds are growing at the appropriate pace? If so, you may want to check out the average 401(k) balance by age to find the answer. Although there are many elements that can play a part in how much or how little a retirement account holds, a 401(k) comparison by age can be a good indicator of where the balance should be. This is also a great way to determine if you need to make adjustments to your savings plan.
It’s Crucial to Know Where Your 401(k) Balance Stands
Performing periodic 401(k) comparisons of your account vs. the average 401(k) balance by age could mean the difference between retiring comfortably to finding out it will be a struggle to retire on what your 401(k) provides. Determining if you stack up to the averages can be as easy as checking your 401(k) balance online and comparing your numbers to the current year’s 401(k) averages.
Knowing where your 401(k) retirement fund stands will enable you to determine if making adjustments to your contribution would be necessary. If you don’t have the extra funds to allocate towards extra 401(k) contributions, you may want to consider finding ways to dissolve your debt to free up more money. Your funds not being where they should be can shed some light on the fact that you may need to consider additional retirement savings options, such as a self-direct IRA, for example.
Average 401(k) Balance by Age
These 401(k) statistics by age are a good baseline to see if you are on track with your savings. If you are, great job! If your numbers are lower than the average, you can simply make the appropriate adjustments to get your retirement savings up to par.
Ages 20-29:Average Balance $11,600/Medium Balance $4,000
This age group, whether just graduating or starting their career, may not be as focused on their retirement savings goals. In addition to this, they most likely are not at their full earning potential yet. Additionally, school loans may cause this age group to consider low 401(k) contributions.
It’s imperative to make wise financial decisions during this time. After all, it sets the foundation for your 401(k) retirement fund. Furthermore, forming smart financial habits while in your 20s will place you on the path to a comfortable retirement.
Ages 30-39:Average Balance $43,600/Medium Balance $16,500
Once 401(k) participants reach their 30s, they are typically earning more income. They also generally have a better understanding of the importance of putting money aside. In addition to this, they may have a two-person household where an additional person is taking on some of the financial burden, which can free up funds to allocate towards a 401(k) plan. Although a mortgage payment may claim a portion of their earnings, at this stage of the game, if they started in their 20s, they should still have a fair amount of retirement savings tucked away.
Ages 40-49:Average Balance $106,200/Medium Balance $36,900
Individuals in their 40s are often established in their career with much higher earnings. They also may have children that have left the nest, which reduces expenses. They are normally well aware of the importance of making their savings a priority. 401(k) numbers should be on track at this point since retirement will be approaching quickly.
Ages 50-59:Average Balance $179,100/Medium Balance $62,700
Those 50-59 are now in the final stretch and must be sure that their retirement fund is comparable to the average 401(k) balance for their age. Those who have fallen a little behind will have a chance to catch up because the government allows this age group to start contributing $6,000 over the max contribution limit. At age 59, you can start cashing in on your 401(k) fund without the 10% penalty. However, those taxes that were deferred over the years will now kick into action, so just be aware of that.
Ages 60-69:Average Balance $198,600/Medium Balance $63,000
At this age, if you have the funds, you can retire at any point! Hopefully, you have scored high on the 401(k) balance by age meter. This would mean that you would not have to continue to work, if you decide not to. On the other hand, if you did not meet the quota, you may have to continue working. At this point, you might prefer to create some passive income as opposed to working a 9-5 job, five days a week. You have probably done enough of that over the years.
Does Your 401(k) Balance Reflect Your Age?
Are you satisfied with your numbers after looking into the 401(k) balance by age comparisons? If you are, congratulations, you’re all set. If you have found that you came up short, take a look at these useful ideas for creating more funds for your retirement savings.
- Online High-Yield Savings Account – Start placing additional money in an online savings account that offers a high-interest rate, no opening or maintenance fees, as well as daily compounding interest. I recommend utilizing Marcus by Goldman Sachs, they offer incredible interest rates.
- Start a Blog – Start blogging and earn extra income. You would be amazed at how much you can earn by just blogging about topics you are interested in. I use Bluehost to host all my blogs and I highly recommend them.
- Invest in Real Estate – This is one of the best ways to earn a high return on your investments. To get started, you may want to take a look at this free webinar on how to make $75,000+ with real estate investments. Or, check out this beginner’s guide to purchasing rental property.
Stay on Top of Your 401(k) Balance!
Now that you know the average 401(k) balance by age, you will want to stay on top of your retirement funds. This will ensure your 401(k) is where it should be at all times. Also, consider placing additional funds in alternative retirement savings accounts so that all your eggs are not in one basket. In doing so, you will be prepared and have the funds needed to enjoy your retirement!
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