What is the average 401k balance? How do you measure up?

 

Building your wealth with a retirement plan!

Retirement plan, like the 401k, is one of the most important tools you can use to accrue wealth.  About 58% of Americans were active participants to 401k plans according to a report in 2018.  The built in tax advantage of a 401k plan allows individuals to grow their money tax deferred.  

Other advantages like company matching and automatic enrollments are beneficial in ensuring individuals have the best chance at growing their nest eggs for retirement.  

However, for all the advantages of a 401k, it’s widely believed that many Americans are falling behind on their savings.  A general rule of thumb says you should have saved the following amounts equal to your current salary:

  • Age 30:  One time your annual salary.  If you make $30k, then you should have $30k saved.
  • Age 40:  Three times your annual salary.  If you make $30k, then you should have $90k saved.
  • Age 50:  Five times your annual salary.  If you make $30k, then you should have $150k saved.
  • Age 60:  Seven times your annual salary.  If you make $30k, then you should have $210k saved.
***These numbers will give you a general guideline where your savings number should be.  You should strive to save more if you can!


Without further ado, let’s take a look at the average 401k balance, according to Vanguard’s 401k report entitled ‘How America Saves 2020’.

Average 401k balance for year 2019:  $106,478.

Median 401k balance for the year 2019:  $25,775.

Note:  The large discrepancy between the two numbers is due to few account holders with large balances that tend to skew the numbers.  It’s a good practice to look at the median number, as that represents a number where half the accounts have more, while the other half have less.

These numbers below will further break down by income and sex:

Income:  Under $15,000 / Sex:  Female / Balance:  $7481 (Median Balance:  $1357)
Income:  Under $15,000 / Sex:  Male / Balance:  $11834 (Median Balance:  $2022)

Income:  Between $15,000-$29,999 / Sex:  Female / Balance:  $13071 (Median Balance:  $4091)
Income:  Between $15,000-$29,999 / Sex:  Male / Balance:  $15419 (Median Balance:  $4590)

Income:  Between $30,000-$49,999 / Sex:  Female / Balance: $32402 (Median Balance:  $11666)
Income:  Between $30,000-$49,999 / Sex: Male / Balance:  $31166 (Median Balance:  $11234)

Income:  Between $50,000-$74,999 / Sex:  Female / Balance: $65704 (Median Balance:  $27810)
Income:  Between $50,000-$74,999 / Sex:  Male / Balance:  $71677 (Median Balance:  $31067)

Income:  Between $75,000-$99,999 / Sex:  Female / Balance:  $110901 (Median Balance:  $52923)
Income:  Between $75,000-$99,999 / Sex:  Male / Balance:  $122441 (Median Balance:  $60840)

Income:  Between $100,000-$149,999 / Sex:  Female / Balance:  $171614 (Median Balance:  $91296)
Income:  Between $100,000-$149,999 / Sex:  Male / Balance:  $199272 (Median Balance:  $107325)


As these median numbers show, we all could do better at saving for retirement.  The median balances will most likely be insufficient to fund 30 plus years of retirement.  Relying on social security, hitting the lottery, or waiting for an inheritance is not a valid plan for retirement.  

Let’s make a plan then commit to saving more for retirement!  

Thank you all for reading!


Jake

Wandering Money Pig 


If you missed the post ‘What’s it like to hand in your resignation...’, please click here.

If you missed the post ‘How to retire early...’, please click here.

If you missed the post ‘We sold our home during the pandemic...’, please click here.

If you missed the post ‘What is the FIRE (financial independence retire early) movement...’, please click here.

If you missed the post ‘Magic of compounding interest...’, please click here.

If you missed the post ‘Our minimalist update…’, please click here.

If you missed the post ‘Dangers of entitlement on your path to happiness…’, please click here.

If you missed the post ‘Get rid of debt to reach your goal of financial independence…’, please click here.

If you missed the post ‘Thinking of moving to Pennsylvania…’, please click here.

If you missed the post ‘Learn to say enough to be happy on your path to financial independence and to retire early…’, please click here.

If you missed the post ‘Why is downsizing/minimalism so difficult…’, please click here.

If you missed the post ‘Is America still a land of opportunity…’, please click here.

If you missed the post ‘Learn a skill that pays you well to retire early…’, please click here.

If you missed the post ‘Invest and not save for retirement…’, please click here.

If you missed the post ‘Learn to enjoy the moment for life and for FIRE…’, please click here.

If you missed the post ‘The correlation between consumerism and early retirement…’, please click here.

If you missed the post ‘Retire on $200,000 (200k)…’, please click here.

If you missed the post ‘Adapting to change for life and for FIRE…’, please click here.

If you missed the post ‘Thinking of moving to Hawaii…’, please click here.

If you missed the post ‘Tough childhood leads to success in later life…’, please click here.

If you missed the post ‘Thinking of moving to New York City…’, please click here.

If you missed the post ‘Importance of finding purpose in early retirement…’, please click here.

If you missed the post ‘What is the rule of 72…’, please click here.

If you missed the post ‘Retire on $100,000 (100k)…’, please click here.

If you missed the post ‘The importance of a significant other’s role in your path to FIRE…’, please click here.

If you missed the post ‘Save for retirement or pay off debt…’, please click here.

If you missed the post ‘How much do I need to retire…’, please click here.

If you missed the post ‘Early Retirement Manifesto…’, please click here.

If you missed the post ‘Pros and cons of early retirement…’, please click here.

If you missed the post ‘How to save money when traveling…’, please click here.

If you missed the post ‘What is the average 401k balance…’, please click here.

If you missed the post ‘Doing a garage sale during the pandemic…’, please click here.

If you missed the post ‘First few months after early retirement…’, please click here.

If you missed the post ‘Not caring too much equals happiness…’, please click here.

Please check out our YouTube channel ‘Wandering Money Pig’ showcasing our travels and our Pomeranian dog! https://www.youtube.com/channel/UC3kl9f4W9sfNG5h1l-x6nHw




Popular posts from this blog

AirBNB horror story: How we got a refund from AirBNB due to a noisy neighbor…

Review of Vdara Hotel, Las Vegas, NV (Nevada): Pros and Cons

Review of Fiore Suite and classic room at the Borgata, Atlantic City, NJ (New Jersey)