The average 401(k) balance for those aged 55 to 64 is $244,750, according to Vanguard’s 2024 How America Saves report. However, the median balance paints a more accurate picture of the typical person’s savings in this age group. The median 401(k) balance is just $87,571.
This means that half of the participants have more in savings and half have less. The average can be skewed by extremely high-earning individuals with millions saved for retirement. While $87,000 is still a healthy amount of money, it may not last more than a few years in retirement for most people.
If you’re falling behind on your savings, one of the easiest ways to save more is to take full advantage of your employer’s 401(k) match. The most common type of 401(k) match is 50% of a worker’s contributions up to 6% of his or her salary. That can instantly boost your savings by thousands of dollars per year.
If you’re not contributing enough to earn the full match, you’re leaving free money on the table.
Average balances skewed by high-earners
For retirees aged 65 and older, the average 401(k) balance is $272,588.
The median balance for this age group is $88,488. Determining the ideal amount to have in a 401(k) can be challenging, as it heavily depends on individual retirement plans and locations. A common rule of thumb is to aim for an annual income in retirement that is 80% of your last working year’s income.
For instance, if you earned $80,000 in your final working year, you should aim for $64,000 annually in retirement. This 80% rule is only a broad guideline and should be adjusted based on personal circumstances. In addition to 401(k) savings, many retirees also rely on Social Security benefits.
There are several strategies to maximize Social Security income, which can significantly impact overall retirement finances. Saving for retirement is tough, but simple steps can make it a little easier. With the right strategy, you could save more than you might think.
By being informed and proactive, you can navigate the complexities of retirement planning and enhance your financial security for the future.
