What Is the Average 401(k) Balance by Age?

Retirement is a big milestone but getting there doesn’t happen overnight. Financially preparing yourself to leave the workforce requires some forward thinking. If you’re asking yourself, “How much should I have in my 401(k) at my age?” you’re not alone. 

How much should I have in my 401(k)? 

A general rule is to have six to eight times your salary saved by age 60, though more conservative estimates may skew higher. The truth is that your retirement savings plan hinges on your individual goals and financial situation. Here are a few ways to measure whether you’re on the right track. 

Making 401(k) contributions

A 401(k) is an employer-sponsored account that’s specifically built to help you save for retirement. The contributions you make during your working years are typically made via automatic payroll deductions. That money may then grow over time — and if your employer offers any sort of match, all the better. 

401(k) withdrawals 

When it comes to using your 401(k) in retirement, you’ll typically have to wait until age 59½ to make withdrawals in order to avoid a 10 percent penalty. Of course, you certainly don’t have to begin taking 401(k) distributions at this age. Letting that money continue to grow can help you shore up your nest egg and avoid additional taxes. However, you will need to begin taking required minimum distributions (RMDs) starting at age 72. 

In retirement, you’ll be taxed on 401(k) distributions as if it were ordinary income. Therefore, it’s important to remember that a portion of what you’ve saved will go to Uncle Sam. Being strategic about how much you withdraw each year can help prevent you from paying more income taxes than necessary.   

Average 401(k) balances by age 

Your 401(k) savings target should be tailored to your unique financial situation and goals. With that said, it can be helpful to compare your 401(k) balance to the average retirement savings.

How much should I have in my 401(k) by age 30? 

While you may not be able to afford to make the maximum 401(k) contribution early in your career, the more you contribute at a young age, the more time your money has to grow. 

Investing early also gives you a longer timeline to weather any stock market downturns, so that you are more likely to reach the balance you need for retirement. According to the most recent data from the Federal Reserve, the average retirement savings for workers under 35 with a 401 (k) balance was about $30,000. 

How much should I have in my 401(K) by age 60? 

For 55- to 64-year-olds with a 401(k), the average retirement savings is a little more than $408,000, according to the Federal Reserve. 

One factor to consider here is how long you (and your spouse, if applicable) plan to be out of the workforce. If you plan to retire early, you’ll have to factor in additional health care costs as you won’t be eligible for Medicare until age 65. Meanwhile, the minimum age to begin collecting Social Security is 62, but the longer you can wait, the higher your payment will be. You’ll also need to factor in expenses and the lifestyle you want to live in retirement. 

How to boost your 401(k) retirement savings 

401(k)s come with contribution limits. For 2022, you can contribute up to $20,500. The IRS allows folks who are 50 or older to kick in an additional $6,500. If your employer offers a Roth 401(k), you may be able to make after-tax contributions (these still count toward the 401(k) contribution limits). Not only will the money grow tax-free, but you also generally won’t have to pay taxes on it when you withdraw it in retirement. Beyond your 401(k), you can leverage other retirement savings vehicles outside of what your workplace offers, such as a traditional or Roth IRA, to bolster your nest egg.

Keep in mind a 401(k) represents just one source of retirement income. A financial advisor can help discuss the range of options that are available to you to help you build a more durable, consistent income stream. 

This publication is not intended as legal or tax advice. Consult with a tax professional for tax advice that is specific to your situation.  All investments carry some level of risk including the potential loss of all money invested.