New data has revealed how much the average American in each age group has saved in their workplace 401(K) retirement account.
Every year, investment management firm Vanguard analyzes data from millions of American retirement accounts.
The average balance for all ages was found to be $134,128 in 2024, while the median balance is $35,286.
While the amount each American has saved for their later years depends largely on their income, location and lifestyle, knowing how much other people your age have saved can be a useful benchmark.
This comes amid fears that millions of Americans are unprepared for retirement, while others are increasingly withdrawing money from their 401(K) accounts to fund financial emergencies.
Vanguard found that the average balance for all ages is $134,128 in 2024, while the median balance is $35,286.
According to Vanguard, the average balance for Americans under 25 is $7,351, while a fund balance of $37,557 is the norm for those between 25 and 34.
For people between 35 and 44 years old, the typical balance is $91,281, while the average retirement fund for people between 45 and 54 years old is $168,646.
When it comes to those closest to retirement (Americans ages 55 to 64), typical savings amounts to $244,750.
And for those 65 and older, the average American has $272,588 in their 401(K), Vanguard found.
In 2024, Americans will be able to contribute up to $23,000 to a 401(K) retirement account. If you started at age 18, that would amount to $966,000 in contributions alone by the time you reach age 60.
People age 50 and older can also contribute an additional $7,500 to their workplace plan this year.
“A 401(K) is an employer-provided retirement savings plan with some tax advantages,” said Cassandra Kirby, a certified financial planner and wealth advisor with Braun-Bostich & Associates. USA today.
‘Normally the employer provides a matching contribution, which is a good incentive.’
If you fear you may be behind on your savings for your age group, there are steps you can take.
“One really important thing is that you always contribute until the end of the game; otherwise, you’re leaving money on the table,” Kirby told USA Today.
Setting up automatic contribution increases is also an option, he said.
“Sometimes you can sign up and every year your savings go up 1 percent,” Kirby said. “It’s kind of like ‘set it and forget it.’ That can be helpful.”
He added that you should put any bonuses you receive at work toward retirement savings and try to increase your 401(K) contributions every time you get a raise.
While the amount each person needs to support themselves in retirement varies, experts say trying to save 20 percent of your gross income is a good starting point.
Choosing the right time to retire is also crucial, according to another study by financial services firm Morningstar.
It was found that about 45 percent of households retiring at age 65 will run out of money.
Starting to save early can be the difference between a comfortable or stressful retirement
According to Vanguard, the average balance for Americans under 25 is $7,351, while a fund balance of $37,557 is the norm for those between 25 and 34.
However, if that age is extended to 70, the odds drop dramatically to 28 percent.
Social Security benefits, a key pillar along with the 401(K) for retirement income, kick in at age 67 for anyone born after 1960.
However, the Social Security Administration will increase the payment by 8 percent for each year beyond full retirement that you delay claiming, until age 70.
“The model paints a clear picture: Participating in an employer-sponsored defined contribution plan significantly reduces the risk of retirement shortfalls,” said Spencer Look, associate director of retirement research at Morningstar.
“The biggest lesson for young people – or at least something really important to highlight – is that if you have access to a plan but you don’t participate, we definitely encourage you to participate, just saving something is better than nothing,” Look added.