Are You on Track for Retirement?

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• The average 401(k) balance is $134,128, according to Vanguard’s 2024 report. 
• Comparing average 401(k) benchmarks can help you fine-tune your retirement planning strategy. 
• Depending on your retirement planning goals, you may need to save more or less than the benchmark.

A 401(k) is a robust retirement savings vehicle for employees of for-profit companies. It is one of the best retirement plans for U.S. workers to build long-lasting wealth. You reduce a portion of your income tax, allowing your funds to grow tax-deferred until retirement. 

Every year, Vanguard analyzes data from millions of retirement accounts. Understanding this 401(k) benchmark helps you determine how much you need to retire by your age group. 

The overall average 401(k) balance is $134,128 in 2024, with the median balance being $35,286.

Here is how much you should have saved in your 401(k) by each age group. 

Average 401(k) balance by age (2024 data)

This data comes from Vanguard’s 2024 report titled “How America Saves.”

Factors influencing 401(k) balances

Age and years of saving

Time is a crucial part of financial planning for retirement. Contributing money from an early age allows your money to reap the full benefits of compound interest. Even modest contributions can grow into significant savings over time when deposited regularly. 

Income level

How much is in your 401(k) savings is also greatly influenced by your income level. Across all age groups, the amount people save for retirement increases with their earnings.

However, Vanguard’s data found that in 2024, households with a higher annual income had lower average and median 401(k) balances than in previous years. This may be due to inflated prices and the general increased cost of living that pressured households to contribute less toward retirement, such as making a 401(k) hardship withdrawal. 

Employer match

A common benefit with 401(k) plans is employer match contributions. Employers can match a dollar-for-dollar or partial match, up to a certain limit, when an employee contributes toward their workplace retirement plan.

If you can swing it, your 401(k) contributions should be enough to unlock your employer’s full match and hit your retirement saving benchmarks. You can contribute more than that, but you won’t receive additional employer matches on those funds. 

Under the Secure 2.0 Act, employers can now offer a student loan match to their employees’ retirement savings plans when they make qualifying student loan payments. 

Investment choices

How you invest the money in your 401(k) is just as important as the initial contribution. In addition to gaining compound interest, you must invest in stocks, bonds, ETFs, and other retirement funds to combat inflation and build wealth. 

Diversifying your investment is key to managing risk and volatility in your portfolio. Investment diversification in a 401(k) may also boost growth by getting exposure across multiple market sectors and different kinds of assets.

Economic conditions

As the market fluctuates, so will the composition of your investment portfolio. Your age and proximity to retirement also influence how your portfolio should be allocated. Regular rebalancing is key to keeping your investments on track and maximizing your 401(k) contributions to reach your goals and stay aligned with your risk tolerance. 

You might also consider adjusting your retirement timeline. Pushing back your retirement date allows you to put more of your employment income aside for retirement and may increase the amount you receive in Social Security benefits.

How to improve your 401(k) balance

1. Start contributing early

Most 20-year-olds are just starting to contribute a small amount toward a 401(k) or equivalent retirement plan. Between lower salaries, rent payments, student loans, and other living expenses, younger individuals typically can’t contribute much toward retirement. But that’s okay as folks in their 20s have time on their side.

With compounding interest, the earlier money is put into an account, the more opportunity it has to grow and the greater the possible returns. In retirement accounts like 401(k)s, building retirement savings early means a greater chance for growth. 

2. Increase contributions as your salary increases

Ideally, you’ll be able to contribute more as your salary increases and your financial situation improves. Salary increases generally coincide with age. So, workers in their 40s can often contribute a much larger portion of their income compared to peers in their 20s and 30s.

Contributions should increase annually. However, be careful not to over-contribute to your 401(k) plan. Instead, consider setting aside cash in an emergency fund or creating additional savings buckets for long-term financial goals like having kids or buying a home. 

3. Review investment choices as you near retirement

Choosing your retirement portfolio’s asset allocation isn’t a one-and-done deal. Your investments must be rebalanced regularly as market conditions shift and you have less time to recover from significant loss. During retirement, or when near it, your portfolio should be adequately adjusted for stability and provide a steady source of reliable income. 

For example, when entering your 40s and 50s, gradually shift your holding to a more conservative risk tolerance so that a larger percentage of your money is invested in low-risk bonds and other fixed-income securities. 

4. Older workers can consider catch-up contributions

Employees ages 50 and up can contribute an additional $7,500 as a 401(k) catch-up contribution to their retirement plan. Typically, employees can contribute up to $23,000 to their 401(k) in 2024. However, with a catch-up contribution, older employees can contribute up to $30,500 annually. 

Catch-up contributions can significantly boost your retirement savings, especially if you had a late start. As you near retirement age in your 50s, take advantage of catch-up contributions to finalize your retirement goals and continue storing as much as possible in a retirement account. 

5. Avoid early withdrawals that hinder-long-term growth

Withdrawing early from your 401(k) can have significant implications on your retirement savings down the line. You will incur a 10% penalty fee, and the withdrawn funds will miss out on potential growth opportunities. Even if you were to pay yourself back, as you would with a 401(k) loan, you couldn’t make up for the lost time the money wasn’t accruing interest or being invested. 

To avoid a premature withdrawal, contribute only money you won’t need to access until you’re at least 59½. Additional funds can be deposited into your emergency savings or more flexible investment baskets.  

Beyond averages: Setting your own retirement goals

Calculate your retirement needs

While the average 401(k) balance by age is a good benchmark to help you see whether you are on track to secure a comfortable retirement, how much you need saved varies based on your desired lifestyle and projected expenses in retirement. 

You can use Business Insider’s personal finance retirement calculators to see how much of your annual income you should contribute each year toward your 401(k) or other retirement plans. This calculator also considers your estimated life space, preferred retirement age, and interest rates.

Work with a financial advisor

The best bet to making your retirement goals a reality is to work with a financial advisor specializing in retirement planning. Like a CFP, a fiduciary advisor provides unbiased advice and guidance on best meeting your goals using a holistic approach that considers your entire finanical picture. 

Other Average 401(k) balance benchmarks

Average 401(k) balance by income level

Here’s the annual income compared against the average 401(k) balance and median 401(k) balance:

Average 401(k) balance by gender

On average, men save more for retirement than women. Across all age levels, Vanguard’s data indicates that women have a median 401(k) account balance of just over $11,099 less than men’s.

While a large disparity in savings exists, women often need greater retirement savings than men to retire comfortably. Women tend to live longer and, therefore, need more long-term care than men, which could require greater spending in retirement.

Average 401(k) balance by industry

Here’s how the average balances break down by industry.

People who work in agriculture, mining, and construction contribute significantly to retirement, with the average industry worker’s account balance well over $180,000. However, teachers, healthcare workers, and people who work in wholesale and retail tend to lag, with average account balances under $97,000.

FAQs for average 401(k) balances by age

Takeaway on average 401(k) balance

A 401(k) or other retirement plan is more than a savings account. It is a wealth-building tool that ensures a comfortable, secure, and stress-free retirement. By understanding how age, income, and gender impact your retirement savings, you can make better-informed decisions that align with your demographic and investment goals. 

But you’ll need a well-thought-out financial plan before you can reap the rewards of your retirement savings. Consult a financial expert like a fiduciary or CFP for professional management and guidance.