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Average 401(k) balance by age and how to boost yours

See how your balance stacks up.

Justin Cupler

Contributing Writer at Tally

January 16, 2020

With pensions reserved mostly for government workers and a select few private-sector employees, self-funded retirement funds are a key part of your prime working years. That said, it’s no surprise the 401(k) has become the dominant force in retirement funds since its almost accidental creation in 1978. And with Social Security's uncertain future, we can expect it to remain a popular choice going forward.

Today, workers dreaming of retirement often watch their 401(k) savings account balances like hawks. But why watch them if you don’t know where you stand? 

Comparing your 401(k) balance to those in your age range shows you how well you’re doing. Additionally, you’ll also want to understand how much savings you need at each stage to retire comfortably when the time comes — and how to get there.

We’ll examine all that and more to help you in your retirement planning.  

Overall average 401(k) balance

At the end of the third quarter in 2019, Fidelity Investments, a leader in American workplace benefits, reported its average 401(k) balance sat at $105,200. This was a slight decrease of less than 1% compared to the previous quarter, which hit a record high of $106,000.

Fidelity Investments stated the decrease was due to fluctuations in the stock market and that despite these fluctuations, it continued to “see positive investing and savings behaviors among people saving in Fidelity retirement plans.”

While the average balance is a good starting point for seeing where you stand, it can be more helpful to take a look at average 401(k) balances for those in your age or generation bracket. Often, these will be people who’ve been in the workforce and investing for a similar length of time.

Average 401(k) balance by generation and participation duration

Most financial advisors will tell you retirement planning is a marathon, not a sprint, so it’s vital to get into it early and stick with it for the long haul. Fidelity’s average 401(k) balance analysis backs up this stance.

Millennials who’ve invested for a decade have an average 401(k) balance of $137,300, which is 30.5% more than the $105,200 average. This number continues climbing as you move into older generations, as Generation X and baby boomers’ retirement savings land at $281,000 and $366,100, respectively.

Adding just another five years to that number results in even more significant gains. Millennial savers who’ve invested for 15 years have an extra 31.4% in their 401(k) retirement accounts, putting them at $180,400.

Generation X savers who’ve been investing in their 401(k) accounts for 15 years have an average balance of $359,200, which is 27.8% more than 10-year investors.

Finally, baby boomers who’ve participated in a 401(k) for a decade and a half have an average balance of $438,300. That’s 19.7% more than 10-year participants.

Here’s a quick glance at the numbers:

  • Those with 10 years of 401(k) participation

    • Millennials: $137,300

    • Generation X: $281,000

    • Baby boomers: $366,100

  • Those with 15 years of 401(k) participation

    • Millennials: $180,400

    • Generation X: $359,200

    • Baby boomers: $438,300

The moral of this numerical story is to get into your 401(k) early and stick with it to complete that retirement marathon.

Average 401(k) balance by age

The folks at CNBC spoke further with Fidelity about its average 401(k) balances and how they broke down. This brought in more specific numbers showing the average American retirement account balances by age ranges.

Here’s how each age range looks:  

  • 20-29 years old: $11,800

  • 30-39 years old: $42,400

  • 40-49 years old: $102,700

  • 50-59 years old: $174,100

  • 60-69 years old: $195,500

Despite the average 401(k) balances in the U.S. setting records in the past few quarters, the average balances by age are still not where they need to be. Fidelity and other experts recommend having at least 10 times your yearly salary saved by 67 years old, the retirement age for full Social Security benefits. With the average 401(k) balance of workers in their 60s landing at $195,500, it’s unlikely most people are meeting this goal.

If you’re a little behind in your retirement savings, you’re not alone. Instead of panicking, look at where you stand now and where you need to be at upcoming milestones, then adjust your savings to meet these key points.

Fidelity’s recommended savings milestones at specific ages are:

  • 30: one times your annual salary

  • 35: two times your annual salary

  • 40: three times your annual salary

  • 45: four times your annual salary

  • 50: six times your annual salary

  • 55: seven times your annual salary

  • 60: eight times your annual salary

  • 67: 10 times your annual salary

Boost your 401(k) savings by reducing debt

If your 401(k) savings aren’t where you want them to be, but you’re also dealing with debt, focus first on paying down your debt.

Once you finish paying off debts, you can funnel the cash formerly reserved for the minimum payment into your monthly 401(k) contributions. Essentially, you’ll be living on the same amount as when you were paying off debt, but instead of that extra money going toward your outstanding debts and interest charges, it will help fill out your 401(k).

You’d be surprised how much even the smallest amount can impact your final 401(k) balance when it’s time to retire. For example, if you roll just $50 monthly into your 401(k) contributions, you could have an extra $86,866 at retirement. This assumes you’re 25 years old, plan to retire at 66 and earn a modest 4% investment return.

The flexibility to put your money where you want — like saving for retirement — is one of the big reasons being debt-free makes a smart financial goal.

Methods to reduce your debt and increase your 401(k) balance

Ready to tackle your debt? Great! There are a few tried-and-true debt-payoff methods that can help you reach your goals quickly and easily.

Debt avalanche

The debt avalanche method lets you focus on debts with the highest interest rates and balances first. Once you pay off one debt, you roll its total payment down to the debt with the next highest interest rate and balance.

This debt-repayment method is an excellent option because it saves you the most on interest over time. It also allows you to split the payment from each paid-off debt between the next debt and your 401(k) contributions.

The biggest downside to this method is it sometimes takes a long time to pay off your first few debts, making it difficult to build up a sense of momentum.

Debt snowball

If you’re looking for some instant gratification with paying off debt, the debt snowball method may be for you. When using this debt-payoff approach, you roll all your spare cash to the debt with the lowest balance while continuing to pay the minimum payments on all other debts.

Once you pay off the debt with the lowest balance, you roll that payment on top of the debt with the next highest balance. You continue this process until all your debts are paid off.

The debt snowball method often motivates people because you can watch debt balances quickly plummet to zero. If you want to double up the satisfaction, you can move only half of the previous debt’s payment into the next debt and roll the other half into your 401(k) contribution rate. For example, if you were paying $100 per month on your first debt, you could roll $50 per month into your next debt and $50 per month into your 401(k) contributions.

Rolling half of these payments into your 401(k) contribution rate becomes even more beneficial if you have not yet hit the cap on your employer match. Using the above example, if your employer's matching contribution is 50%, that $50 per month jumps to $75. 

On the downside, since you’re focusing on the lowest balance, this can leave high-interest, high-balance debts sitting and racking up interest charges.

Debt consolidation

Debt consolidation takes most or all your credit cards and other debts and rolls them into a single loan with a lower interest rate. Not only does the lower interest rate generally result in a lower monthly payment, but rolling multiple credit cards into one loan also gives you a lower payment due to credit card companies’ minimum-payment rules.

A debt consolidation loan takes all those minimum payments you’re making and puts them into one easy-to-manage payment. It may also result in a quick boost to your credit score, as credit bureaus often see their fixed terms as more manageable than revolving credit card debt. Debt consolidation also allows you to immediately roll your monthly savings into your 401(k) contribution rate, or you can use the savings to pay off the consolidation loan quicker and save on interest.

The only big drawback to a consolidation loan is that you must have a satisfactory credit score, and high credit card balances can prevent you from getting approved.

Now keep that retirement savings growing

With the average 401(k) balances in hand, the key now is to get to work building that balance and sustaining it. Remember, this is a career-long marathon and not a quick sprint to the finish line, so remain diligent and continuously increase your contributions whenever you can.

Remember, if you crush it and find you've reached the yearly contribution limit for a 401(k) — which is $19,500 in 2020 (plus $6,500 in catch-up contributions if you're over 50) — you can also enroll in other retirement plans, like a traditional or Roth IRA. Or you might put some money into the stock market or other investment vehicles to further pad your retirement savings balance.