Sign in to follow this  
Still_Small_Voice

The average American 401(k) balance by age

Recommended Posts

The average 401(k) balance by age
by Arielle O'Shea via NerdWallet -- January 31, 2019

A record number of 401(k) holders at Fidelity Investments hit millionaire status in 2018. Not one of them? You’re in very good company: A seven-figure 401(k) balance is the exception, not the rule.  In fact, the average 401(k) balance at Fidelity — which holds 16.2 million 401(k) accounts and is consistently ranked as the largest defined contribution record-keeper — was $106,500 as of September 2018.

If that still seems high, consider that averages tend to be skewed by outliers, and in this case, that number is being propped up by those rare millionaires. The median, which represents the middle balance between the highs and lows, is just $24,800.

The below numbers show how 401(k) balances increase with age, at least until participants start drawing on their money in retirement.

Ages 20-29
Average 401(k) balance: $11,600.
Median 401(k) balance: $4,000.

Ages 30-39
Average 401(k) balance: $43,600.
Median 401(k) balance: $16,500.

Ages 40-49
Average 401(k) balance: $106,200.
Median 401(k) balance: $36,900.

Ages 50-59
Average 401(k) balance: $179,100.
Median 401(k) balance: $62,700.

Ages 60-69
Average 401(k) balance: $198,600.
Median 401(k) balance: $63,000.

Read more at:  https://www.theladders.com/career-advice/the-average-401k-balance-by-age

Share this post


Link to post
Share on other sites

I do not save in regular 401K and individual retirement accounts anymore.  My wife and I save in Roth retirement accounts and other tax advantaged savings.  Still, we have about 50% saved according to our age bracket in this survey.  I am hoping to have over six times that in retirement savings within nine years.  Keep saving and hoping people.

Share this post


Link to post
Share on other sites

The Dave Ramsey radio show has a "self made millionaire" segment, where people with greater than $1m net worth call in and tell their stories.  Overwhelmingly, they did not inherit the money.  They just saved responsibly and had a plan.  All of them (at least that I've heard), have a chunk in various 401Ks or IRAs.

Save!

Share this post


Link to post
Share on other sites

Those figures seem kinda low.  401K is one of those usually "free money" stuff.  You pay in a dollar, the company matches a dollar so I would think most people would avail of it and maximize contributions for the free money.

Share this post


Link to post
Share on other sites

I am not one to talk about saving money.  I did not, and it looks like I'll work until I die. 

On the otherhand, I once looked at how much I spent on raising kids.  Without them it looks like I might have actually made the multi-millionaire status. 

The question then is...would I have saved or spent that money?

Hard question to answer. 

Having children has probably made more wealthy in other ways than riches and money, and far better in the long run.

Share this post


Link to post
Share on other sites
Guest Scott
2 hours ago, anatess2 said:

You pay in a dollar, the company matches a dollar so I would think most people would avail of it and maximize contributions for the free money.

A lot of companies don't do that anymore.  Mine still does, but only up to 3% of my salary.   My wife's company doesn't match at all, but you can still contribute.

A lot of companies only match 20% on the dollar and only up to 3% of your salary.   

Share this post


Link to post
Share on other sites
2 hours ago, anatess2 said:

Those figures seem kinda low.  401K is one of those usually "free money" stuff.  You pay in a dollar, the company matches a dollar so I would think most people would avail of it and maximize contributions for the free money.

In my opinion the 401K is a secondary savings vehicle and not the primary.  You can kiss probably at least 22% of whatever money you have in a regular Individual Retirement Account gone when it comes time to withdraw.  A Roth retirement account when you begin withdrawing at retirement is tax free.  You also do not have to start withdrawing from a Roth at age 70.5 or face government penalties.

Share this post


Link to post
Share on other sites

I do not have much in a 401K and I am approaching 75 (not quite there yet).  I do not believe in 401K's.  Most of my investments are in real estate and business holdings - which I also believe to have better tax strategies.   Since I am still working and earning an income I do not feel that I need a lot of liquid assets.  Oh, I almost forgot - I do have some silver as well but I have avoided gold - no real reason just a personal preference.   I also have a 72 hour kit and about a one year supply of food that should keep until I die but I prefer not to use - unless necessary.  I also have hunting and camping supplies - if it comes to that. 

My plan is to work until I die.  I think the wife's plan is to spend everything on our kids before we die.

 

The Traveler

Share this post


Link to post
Share on other sites
8 hours ago, Still_Small_Voice said:

In my opinion the 401K is a secondary savings vehicle and not the primary.  You can kiss probably at least 22% of whatever money you have in a regular Individual Retirement Account gone when it comes time to withdraw.  A Roth retirement account when you begin withdrawing at retirement is tax free.  You also do not have to start withdrawing from a Roth at age 70.5 or face government penalties.

There is an inflection point where one has advantages over the other. But it requires knowing how much you expect to live on in retirement.  If your current salary is higher than your expected withdrawals, then it is to your advantage to to use the traditional IRA. If your current income is less than your expected withdrawals, it is to your advantage to use the Roth IRA. 

How this usually breaks down is that young, early-career workers should be using a Roth IRA and somewhere mid-career, switch to a  Traditional IRA. 

Share this post


Link to post
Share on other sites
5 hours ago, Traveler said:

I do not have much in a 401K and I am approaching 75 (not quite there yet).  I do not believe in 401K's.  Most of my investments are in real estate and business holdings - which I also believe to have better tax strategies.   Since I am still working and earning an income I do not feel that I need a lot of liquid assets.  Oh, I almost forgot - I do have some silver as well but I have avoided gold - no real reason just a personal preference.   I also have a 72 hour kit and about a one year supply of food that should keep until I die but I prefer not to use - unless necessary.  I also have hunting and camping supplies - if it comes to that. 

My plan is to work until I die.  I think the wife's plan is to spend everything on our kids before we die.

 

The Traveler

One of the major advantages of 401Ks (and 403Bs) is that they are protected. If an person goes through a bankruptcy or foreclosure, all of their assets can be gleaned over by creditors, except for retirement accounts. Not even the IRS can touch your retirement accounts. 

That reason alone is a good reason to make use of a retirement savings plan. Should you come on hard times, it doesn't decimate your retirement savings.

Share this post


Link to post
Share on other sites
14 hours ago, Still_Small_Voice said:

The average 401(k) balance by age
by Arielle O'Shea via NerdWallet -- January 31, 2019

A record number of 401(k) holders at Fidelity Investments hit millionaire status in 2018. Not one of them? You’re in very good company: A seven-figure 401(k) balance is the exception, not the rule.  In fact, the average 401(k) balance at Fidelity — which holds 16.2 million 401(k) accounts and is consistently ranked as the largest defined contribution record-keeper — was $106,500 as of September 2018.

If that still seems high, consider that averages tend to be skewed by outliers, and in this case, that number is being propped up by those rare millionaires. The median, which represents the middle balance between the highs and lows, is just $24,800.

The below numbers show how 401(k) balances increase with age, at least until participants start drawing on their money in retirement.

Ages 20-29
Average 401(k) balance: $11,600.
Median 401(k) balance: $4,000.

Ages 30-39
Average 401(k) balance: $43,600.
Median 401(k) balance: $16,500.

Ages 40-49
Average 401(k) balance: $106,200.
Median 401(k) balance: $36,900.

Ages 50-59
Average 401(k) balance: $179,100.
Median 401(k) balance: $62,700.

Ages 60-69
Average 401(k) balance: $198,600.
Median 401(k) balance: $63,000.

Read more at:  https://www.theladders.com/career-advice/the-average-401k-balance-by-age

What is most frightening is that these are the numbers for those that have any savings at all.  More than half of American households have no retirement savings. That's going to come back to bite us.

Share this post


Link to post
Share on other sites
47 minutes ago, MarginOfError said:

One of the major advantages of 401Ks (and 403Bs) is that they are protected. If an person goes through a bankruptcy or foreclosure, all of their assets can be gleaned over by creditors, except for retirement accounts. Not even the IRS can touch your retirement accounts. 

That reason alone is a good reason to make use of a retirement savings plan. Should you come on hard times, it doesn't decimate your retirement savings.

Unless you have student loans or have cosigned on a student loan.

 

The Traveler

Share this post


Link to post
Share on other sites
1 hour ago, Traveler said:

Unless you have student loans or have cosigned on a student loan.

 

The Traveler

It seems you are correct. The government is able to garnish protected accounts under some conditions, but generally only if you qualify for withdrawals. It can also be garnished if you owe alimony or child support, according to brief internet searches.

https://www.investopedia.com/ask/answers/090915/can-my-401k-be-seized-or-garnished.asp

Share this post


Link to post
Share on other sites
3 hours ago, MarginOfError said:

What is most frightening is that these are the numbers for those that have any savings at all.  More than half of American households have no retirement savings. That's going to come back to bite us.

Indeed lots of people do not have plans for retirement.  This is not a new problem...  It is a old problem... so old that and so scary that the voters empowered the government to "fix it".   This is how we got Social Security.   All the government did was get a death grip on our wallets... It did not solve the problem it is still scary.

Yet people still call on the government to fix it.  When those of us who remember our history, who understand how government really works say no to this idea.  We are called uncharitable and greedy.

 

Share this post


Link to post
Share on other sites
10 minutes ago, estradling75 said:

Yet people still call on the government to fix it.  When those of us who remember our history, who understand how government really works say no to this idea.  We are called uncharitable and greedy.

John 12:4-6

This story is old as dirt.

Beware anyone who wants to spend someone else's money on the poor.

 

Charity is you spend your time or money on someone in need

Edited by mikbone

Share this post


Link to post
Share on other sites
1 hour ago, estradling75 said:

Indeed lots of people do not have plans for retirement.  This is not a new problem...  It is a old problem... so old that and so scary that the voters empowered the government to "fix it".   This is how we got Social Security.   All the government did was get a death grip on our wallets... It did not solve the problem it is still scary.

Yet people still call on the government to fix it.  When those of us who remember our history, who understand how government really works say no to this idea.  We are called uncharitable and greedy.

 

Well...I'm all for charity and helping others and I do support the idea of Social Security because we have forgotten Charity as a society...even among our own families.  Children SHOULD take care of their Elders, and Elders SHOULD be willing to live a little less luxuriously and allow their children to help them...

But...we don't live a Christlike Society...

So I support that Safety net idea...that said...

Social Security is the biggest Ponzi Scheme currently out there...and it's supported and pushed on us by the Government...so there's that as well.  The only question is whether, like all Ponzi Schemes...the time to pay up on it is going to be closer or further away.

It is laughable when people say they are OWED Social Security because they paid money into it...no fool...like any Ponzi Scheme...your money was spent on those who were getting that money from before.  Your parents spent your money...and we are spending our children's money.

Still...it's the best thing that we have to help the elderly who cannot help themselves and infirm these days.  The only other option is to let them die in the street.  With the charity of others and how family treats each other these days, I fully expect that without some sort of safety net like SS...we'd have a LOT more homeless and people dying of starvation and in the streets. 

So, I say Social Security is a necessity these days...but it's only because we don't have anything better and perhaps are unable to come up with anything better due to human greed and our own weaknesses.

Share this post


Link to post
Share on other sites
1 hour ago, estradling75 said:
5 hours ago, MarginOfError said:

What is most frightening is that these are the numbers for those that have any savings at all.  More than half of American households have no retirement savings. That's going to come back to bite us.

Indeed lots of people do not have plans for retirement.  This is not a new problem...  It is a old problem...

Indeed.  Looking into retirement homes/senior living/elderly homes/etc, and you see two things.  You see people paying much for a decent standard of living, and you see horror shows of folks who have nothing, and sign over social security and medicaid to the place that will care for them until they die.  The second one is absolutely full of horror shows.  Your state probably has an inspection program, go look it up and see all the violations.  If your state stinks, they stop at reporting the horror - you'll see lots of failing grades.  If your state stinks less, you'll see the audit items have teeth, and the worst ones get closed down.

Ask ER docs for a handful of stories about people shipped to them by old folks homes.  Forgotten, depressed, wasting away in silence and lonliness.  Have I said the word "horror" enough?

Finally, if you're extra strong and really hate yourself, you can do research on suicide and look up statistics based on age.   Or you can just listen to me say "horror" again.

No really, planning and family are important.

 

Share this post


Link to post
Share on other sites
14 minutes ago, JohnsonJones said:

So, I say Social Security is a necessity these days...but it's only because we don't have anything better and perhaps are unable to come up with anything better due to human greed and our own weaknesses.

I would argue that it is not better... but rather worse...  We had people getting neglected.... and now we have people getting neglected and the government taking our money.

Share this post


Link to post
Share on other sites
15 hours ago, Still_Small_Voice said:

In my opinion the 401K is a secondary savings vehicle and not the primary.  You can kiss probably at least 22% of whatever money you have in a regular Individual Retirement Account gone when it comes time to withdraw.  A Roth retirement account when you begin withdrawing at retirement is tax free.  You also do not have to start withdrawing from a Roth at age 70.5 or face government penalties.

There are plenty of ways to manage the tax liability of a post-tax retirement account.  But, even without that...

The plain fact of the matter is that most companies MATCH your contributions.  So, okay, we'll take your 22% tax... and offset it with the 50% company contribution.  Obviously a win.

Share this post


Link to post
Share on other sites
15 hours ago, Scott said:

A lot of companies don't do that anymore.  Mine still does, but only up to 3% of my salary.   My wife's company doesn't match at all, but you can still contribute.

A lot of companies only match 20% on the dollar and only up to 3% of your salary.   

Even with that... Putting 3% of your salary in a 401K and then gaining 20% free money right then and there... add the tax shelter plus the gains over time...still a win.  And like I said above, there are many ways to manage the tax liability at the tail end.

So, let's say the average person makes $50K.  3% of it put in a 401K + 20% match is $1,800/yr right?  10 years of savings that's $18,000... that's without the gains.  So a median of $16,500 between 30-39 age range is kinda low.

My company matches dollar for dollar up to $3,000 per year.  Of course, if the company doesn't match, then 401K becomes unattractive.

Edited by anatess2

Share this post


Link to post
Share on other sites
1 hour ago, JohnsonJones said:

Well...I'm all for charity and helping others and I do support the idea of Social Security because we have forgotten Charity as a society...even among our own families.  Children SHOULD take care of their Elders, and Elders SHOULD be willing to live a little less luxuriously and allow their children to help them...

Legislated (forced) sharing of resources isn't charity.  It seems more like Lucifer's plan than Jesus'.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this