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. 

We’ll give you an idea of how much you’ll want to have in your 401(k) at different ages and how much you should be contributing to your 401(k).  

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.  When determining how much you’ll want to save, here are a few questions you’ll want to answer that will help determine how much you’ll need:  

• How long do you plan to work? Will you stop work completely or continue with part-time work for a while? Will you leave the workforce prior to 65 and need to pay for health insurance?  

• Do you plan to relocate somewhere warmer? Downsize?  

• What do you plan to do with your time in retirement? Travel? Spend time with your grandkids? Take classes?  

Answering these questions is a good start to determining how much you’ll need to budget in retirement. Generally, most people need about 80 to 85 percent of their pre-retirement income to cover their retirement lifestyle, but everyone’s situation is unique.  

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. 

If you're able to, you want to try to put 10 to 20 percent of your paycheck into your 401(k) each month. However, this isn’t always possible, so any money you’re able to put in is going to help you in the long run. Even if you start with 3 to 5 percent and slowly increase as you’re able, saving something is better than saving nothing.  

The IRS does put limits on how much you’re able to contribute, however. In 2023, the individual contribution limit for a 401(k) is $22,500 (or $30,000 if you’re 50 or older). There are also limits to how much your employer is able to contribute. Overcontributing to your 401(k) can come with tax penalties, so if you earn a high income, it’s important to do a little planning ahead of time to make sure you’re not exceeding the limits.   

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 73 (72 if you turned 72 prior to the start of 2023). 

In retirement, you’ll be taxed on 401(k) distributions as if they 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. According to the most recent data from the Federal Reserve, here are the average 401(k) balances by age:  

• Under 35: around $30,000 

• 35–44: around $132,000 

• 45–54: around $255,000 

• 55–64: around $408,000 

• 65–74: around $426,000 

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. 

By the time you reach age 30, you should aim to have around one year’s salary saved up for retirement. Investing early also gives you a longer timeline to weather any stock market downturns, so you are more likely to reach the balance you need for retirement.  

How much should I have in my 401(k) by age 40?  

Into your 40s, you’ve likely gotten more established personally and professionally and, hopefully, have put together a financial plan and monthly budget. If you haven’t yet, now is a good time to increase the amount you’re putting into your 401(k) each month. Ideally, by your 40s, you’ll have about three times your salary saved for retirement.  

Another financial cornerstone you may want to consider in your 40s (if you haven’t already) is life insurance—especially if you’ve got kids. You may have purchased a term policy when you were younger, but looking into a permanent policy (one that covers your current financial situation) also comes with the added benefit of cash value, which could be another source of income in retirement*.  

How much should I have in my 401(k) by age 50? 

You should be in good shape on retirement savings in your 50s if you’ve got about six times your salary saved up. Once you turn 50, you’re also eligible to begin contributing an additional $7,500 in catch-up contributions to your 401(k), so if you’re feeling behind, now’s a great time to start getting caught up.  

Your 50s may feel like an expensive decade, as you could have other financial milestones hitting right about now, like paying for college or buying another property. But it’s important that you keep saving for retirement as a high priority in your savings goals. Your kids can take out loans for college; you’ll need savings in retirement. The good news: If you put a solid financial plan in place, you’ll be prepared once these milestones hit, and you shouldn’t have to make any major changes to your savings plan.  

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

At age 60, you’re likely nearing retirement, so you’ll want to have close to eight times your salary saved for retirement.  

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. Factoring in the lifestyle you want to live in retirement will help you weigh your projected expenses with what you’ll need saved.  

Average 401(k) contribution rate 

According to the Plan Sponsor Council of America, the average 401(k) contribution in 2023 is 6.5 percent of your salary. Chances are, however, saving this much isn’t going to get you to where you need to be to retire. You’ll want to work your way up to contributing 10 to 20 percent as you can. 

You’ll also want to consider your employer match if you’re lucky enough to have one. If your employer matches your contributions, then you’d be able to factor that in when deciding how much you want to contribute. If you can, it’s a good idea to contribute the maximum percentage your employer will match to make the most of this benefit.  

How to boost your 401(k) retirement savings 

A traditional 401(k) is not the only way to save for retirement. If your employer offers a Roth 401(k), you may be able to make after-tax contributions to help with savings. 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. 

To get the most out of your 401(k) savings, you’ll also want to pay attention to the accounts you’re invested in and your risk tolerance at different stages of your career. Early on, you can afford to carry a bit more risk because you won’t need your savings for a while. As you approach retirement, you’ll likely want to be a bit more conservative with your investments to make sure the money is there when you need it. If you’re unsure what risk tolerance you should be carrying, a financial advisor can give you advice.  

How much to save for retirement 

Determining how much you’ll save for retirement each month will largely depend on your income, your expenses, other savings goals, and what kind of lifestyle you want to live in retirement. The most important thing you can do is develop a retirement savings plan early and stick to that plan.  

You’ll also want to regularly check in on your plan, because things change. You may land a new job that allows you to contribute more, get an unexpected bonus that can help you catch up on savings or have to scale back briefly to adjust for an unplanned family medical expense.  

Staying in touch with a financial advisor can help you make sure you’re prepared for retirement. A Northwestern Mutual financial advisor can help you determine how much you’ll need for retirement and help develop a plan that balances all of your savings goals—including retirement.  

*The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy. 

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.