Average 401(k) balance: Strategies for every age (2024)

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• The average 401(k) balance is $112,572, according to Vanguard's 2023 analysis of over 5 million plans.
• But most people don't have that much saved for retirement.
• The median 401(k) balance is significantly lower at $27,376, more reflective of how most Americans save for retirement.

A 401(k) account is an employee-sponsored retirement vehicle that allows you to contribute pre-tax income toward your retirement. As one of the best retirement plans for US employees, a 401(k) lets you reduce the amount of income you're taxed on and lets your funds grow tax-free.

In 2022, the average 401(k) account balance was $112,572, a 20% decrease since 2021's year-end of $141,542, according to Vanguard's annual data report. Each year, Vanguard analyzes account data from 5 million retirement accounts in a report titled "How America Saves."

Across these accounts, the typical account balances vary widely by the method used to calculate it — while the average 401(k) savings balance is well over $100,000, the median account balance is much less at $27,376, according to Vanguard's latest data.

The Vanguard data is broken down by demographics, showing a wide range of average account balances across various age ranges, income levels, industries, and genders. Here's a breakdown of those balances.

Average 401(k) balance by age: Benchmarking your retirement savings

Retirement savings grow with compound interest, which means account balances increase with time. Like other types of retirement accounts, money saved in a 401(k) grows like a snowball, with interest earning interest on itself. The older you are, the more time you've had to build up your savings.

With compounding interest, the earlier money is put into an account, the more opportunity it has to grow and the greater the possible returns. In retirement accounts like 401(k)s, building retirement savings early means a greater opportunity for growth.

Here's the average amount people have saved for retirement by age group, according to Vanguard.

Check out Personal Finance Insider's retirement calculator to see how much of your annual income you can afford to put away.

Ages 20-29: Laying the foundation

Most 20-year-olds are just starting to contribute a small amount of money toward a 401(k) or equivalent retirement plan. Between lower salaries, rent payments, student loans, and other living expenses, younger individuals typically can't contribute much toward retirement.But that's okay as folks in their 20s have time on their side.

Contributing a little here and there is better than nothing at all.

Ages 30-39: Building momentum

People in their 30s often have increased financial freedom to put more money toward retirement. Contributions should be increasing annually. However, you may be distributing funds between different savings and investment accounts if you're planning for other big life events like having kids or buying a home.

This a good time to make calculated risks, as you still have time to recover from larger losses.

Ages 40-49: Mid-career financial growth

Folks in their 40s should be contributing a much larger portion of their income toward retirement. Aim to maximize your contributions and take full advantage of employer benefits like 401(k) matches. Start shifting your investment portfolio to a more conservative risk tolerance so that a larger percentage of your money is invested in low-risk bonds and other fixed-income securities.

Ages 50-59: Preparing for the transition

As you near retirement age in your 50s, take advantage of catch-up contributions, maximize your 401(k) savings, and avoid high-risk investments. Finalize your retirement goals and continue storing as much as possible in a retirement account.

You might also consider adjusting your retirement timeline. Pushing back your retirement date allows you to put more of your employment income aside for retirement and may increase the amount you receive in Social Security benefits.

Ages 60 and up: Finalizing the retirement strategy

Adjust your investment portfolio as needed, and make sure you understand the tax implications of withdrawing funds. Depending on your retirement account type (traditional or Roth), you may have to pay taxes on your withdrawals. Moreover, your portfolio should be adequately adjusted for stability and should provide a steady source of reliable income.

Average 401(k) balance by income level

Vanguard's data shows that 401(k) balances are greatly influenced by annual income. Across all age groups, the amount people save for retirement increases with their earnings.

The most significant 401(k) balance increase comes after the $50,000-per-year mark. While workers earning between $30,000 and $49,999 per year have a median balance of $11,556, workers in the next-highest bracket earning between $50,000 and $74,999 have a median balance of nearly three times larger, at $31,064.

Here's the annual income compared against the average 401(k) balance and median 401(k) balance:

Here's the annual income compared against the average 401(k) balance and median 401(k) balance:

Average 401(k) balance between men and women

On average, men save more for retirement than women.

Across all age levels, Vanguard's data indicates that women have a median 401(k) account balance of just over $10,227 less than that of men.

A 2023 report from the Bureau of Labor Statistics shows that the average woman makes around 86 cents for every man's dollar, affecting how much women are able to put away for retirement.

While a large disparity in savings exists, women often need greater retirement savings than men to retire comfortably. Women tend to live longer and could, therefore, need more long-term care than men, which could require greater spending in retirement.

Average 401(k) balance by industry

Balances also vary widely among industries. One possible explanation for this is that employer match benefits, in which an employer matches an employee's contributions to their savings up to a given percentage, may be more common in some industries than others. Earnings could also affect how workers in a specific industry save.

Here's how the average balances break down by industry.

People who work in agriculture, mining, and construction contribute a significant amount to retirement, with the average industry worker's account balance well over $112,527. However, teachers, healthcare workers, and people who work in wholesale and retail tend to lag behind, with average account balances under $90,000.

Enhancing your 401(k): Strategies for success

1. Start early, contribute often

Time is a crucial part of financial planning for retirement. Contributing money toward your retirement savings allows compound interest to work its magic and combat inflation. Even modest contributions can grow into significant savings over time when deposited regularly.

Ideally, you'll be able to contribute more down the line as your salary increases and your financial situation improves. However, make sure not to over-contribute and lose access to money you'll need in the near future. You can set aside some cash in an emergency fund is a great way to avoid a 401(k) early withdrawal before your 59 1/2.

2. Take advantage of employer-match benefits

A common benefit with 401(k)s is an employer match benefit, and it's essentially free money. Employers can match a dollar-for-dollar or partial match of an employee's retirement saving contributions. If you can swing it, contribute enough to unlock your employer's full contribution amount and hit your retirement saving benchmarks.

Under the Secure 2.0 Act, employers can now offer a student loan match to their employees' retirement savings plans when they make qualifying student loan payments.

3. Diversify investments

Diversifying your investment is key to managing risk and volatility in your portfolio. Investment diversification in a 401(k) may also boost growth by getting exposure across multiple market sectors and different kinds of assets.

You can easily diversify your investment portfolio by investing in different stocks, bonds, ETFs, mutual funds, and alternative investment options like real-estate and commodities.

4. Mind the fees

High management fees can erode your savings over time. Make sure to pay attention to the fee schedules and manage 401(k) fees in your plan by investing in low-cost funds like ETFs. If you have an old employer's 401(k) plan, consider rolling over the assets into a new IRA because IRAs vs 401(k)s offer lower fees and more investment opportunities.

Check out Insider's guide to the best rollover IRAs>>

5. Regular rebalancing

As the market fluctuates, so will the composition of your investment portfolio. Your age and proximity to retirement also influence how your portfolio should be allocated. Regular rebalancing is key to keeping your investments on track and maximizing your 401(k) contributions to reach your goals and stay aligned with your risk tolerance.

Average 401(k) balance by age: Frequently asked questions (FAQs)

Your 401(k) is your future

A 401(k), 403(b), or other retirement plan is more than a savings account. Retirement savings plans are a wealth-building tool to ensure a comfortable, secure, and stress-free retirement. By understanding how factors like age, income, and gender impact your retirement savings, you can make better-informed decisions that align with your demographic and investment goals.

But before you can reap the rewards of your retirement savings, you'll need a well-thought-out financial plan. Consult a financial expert like a fiduciary or CFP for professional management and guidance.