Latest 401(k) Typical Savings Balance Per Age Category: Where Do Your Figures Stack Up?

Latest 401(k) Typical Savings Balance Per Age Category: Where Do Your Figures Stack Up?

Comparing your investing strategies to others can be deceptively misleading. Different investors have diverse investment objectives and income levels. Some retirees might expend their savings excessively, while others may even increase their net worth after retiring. In essence, your primary focus should be on ensuring your strategy suits your needs.

It's understandable to want to know how average investors in your age group are faring, serving as a mental reference point.

With this perspective, here's a closer inspection of Fidelity's findings from its third-quarter analysis of all the 401(k) accounts it manages. Let's hope you're performing better than many…not that this automatically signifies you're on track.

Typical 401(k) account balance by age group

Fidelity frequently shares aggregated information on its 401(k) plan customers, offering insights into the current market situation. In its latest report, it also provides a breakdown of average 401(k) account balances by age group. As expected, older investors, who've had more time to save and grow their finances, are performing better than their younger counterparts. Here's a breakdown by age group as of September's end:

| Age Group | Typical 401(k) Account Balance || --- | --- || Baby boomers (ages 60 and up) | $250,900 || Gen X (ages 44 to 69) | $191,900 || Millennials (ages 28 to 43) | $66,500 || Gen Z (up to 27) | $13,000 || Overall average | $132,300 |

Baby boomers (ages 60 and up)

If you find yourself lagging behind the average of others your age, don't worry unduly. As the report points out, a small fraction of investors are significantly influencing these averages – particularly in the baby boomer age group. Fidelity also mentions that it is serving an increasing number of 401(k) accounts with balances above a million dollars, totaling 544,000, compared to the second quarter's 497,000. Furthermore, 418,111 conventional or Roth IRAs have reached or exceeded seven-figure values compared to just below 400,000 three months earlier.

$250,900

Keeping the average in mind can still provide a useful starting point if you recognize the need for a change in strategy.

The two significant truths (which aren't exactly secrets)

Gen X (ages 44 to 69)

The aforementioned figures raise the question: How are some individuals building such substantial wealth with their 401(k) accounts while others struggle?

$191,900

Income undeniably plays a role; those with higher incomes have more disposable income to save.

That said, income might not be as significant a factor as you might think. Time is a crucial element, arguably the most significant. As Fidelity's report emphasized, even some Gen-X savers have larger account balances than some averages for baby boomers. Specifically, consistent Gen-X 401(k) contributors with 15 years of experience have an average account balance of $586,100.

Millennials (ages 28 to 43)

Besides the employee's deposits, the employer's contribution to a 401(k) adds significant value. In the last quarter, the overall average contribution to an employer-sponsored retirement account was a commendable $2,350 for all age groups, with the employer contributing an additional $1,240. In essence, this means an instant return of about 50% on the employee's retirement plan contributions.

$66,500

This doesn't imply that individuals with separate retirement accounts are doing poorly. As mentioned earlier, there are over 418,000 Fidelity customers with million-dollar IRAs.

Optimally, everyone should aim to contribute the maximum amount possible from their employer before investing in a retirement account outside of a work-based plan.

Gen Z (up to 27)

Activity is better than inaction

$13,000

Once more, the figures in the table above might not be indicative of good or poor performance, or even within an acceptable range for you. You might be content with less; alternatively, you might be at risk of financial hardship later in life despite having more.

$132,300

Creating a sensible budget now, as well as for the future, is essential. Additionally, making the most of your investments while you have the opportunity is crucial. You may need to adjust your plan to target higher growth rates or perhaps scale back your risk levels. Ultimately, the details can make or break your investment journey.

Overall average

Looking at the average 401(k) balances by age group can help you set financial goals for retirement, with baby boomers (ages 60 and up) having an average balance of $250,900 and millennials (ages 28 to 43) having an average balance of $66,500. However, income and time are significant factors in building wealth, and even some Gen-X savers have larger account balances than some averages for baby boomers.

Keeping the average in mind can provide a useful starting point, but every individual's financial situation is unique. For instance, if you find yourself lagging behind the average for your age group, don't worry unduly, as a small fraction of investors are significantly influencing those averages. Optimally, everyone should aim to contribute the maximum amount possible from their employer before investing in a retirement account outside of a work-based plan.

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