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Average 401(k) balances among older Americans

Below you can see the average and median 401(k) balances for people in their 40s and beyond. The data is from Empower’s free online financial dashboard which is used by over 3 million Americans as of November 2022.

40s

Average balance - $344,182 , Median balance - $151,274

50s

Average balance - $558,740 , Median balance - $247,338

60s

Average balance - $555,621 , Median balance - $209,382

70s

Average balance - $417,379 , Median balance - $103,219

The big gap in average versus median balance is explained by a small number of very large accounts skewing the data. Still, while average balances are higher, these numbers show many older Americans are falling short.

U.S. adults believe they need $1.46 million in savings to retire comfortably, according to a Northwestern Mutual study.

According to the popular 4% rule, only withdrawing 4% of your nest egg during retirement ensures you won’t run out of money for 30 years. If you assume the 401(k) is the entirety of someone’s retirement savings, a balance of $555,621 at age 65 when they retire would give them around $22,000 in annual income in the first year. The median balance of $209,382 would translate to less than $10,000 to live on in the year.

This means the typical American is in some trouble when it comes to their retirement security.

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Boost your 401(k) balance

If you're in your 40s or beyond, hopefully your 401(k) balance is above average and money concerns won't be an issue for your retirement. But, as the numbers show, this is far from the reality for most.

If your balance falls short, there are some steps to take to get back on track

  1. Make retirement savings a top priority. If you're funneling money to other goals such as saving for college for your kids, you may want to redirect those funds. Your kids can borrow for school and have time to build wealth. You can't take loans for your retirement and your time is running short. Responsibly investing in the stock market helps you earn returns that build your nest egg more quickly.
  2. Take advantage of help that's available. The government subsidizes retirement savings by making contributions to 401(k) and IRA accounts deductible. Your employer may also offer a 401(k) match, which means you earn free money by contributing to your workplace plan. Aim to maximize your contributions to whatever plan you have.
  3. Understand your goals. If you haven't already set a retirement savings goal, do it today. Assuming you'll need 80% of your final salary each year is a quick-and-simple approach, although there are other ways to estimate your own retirement savings target.
  4. Make saving automatic. You're less likely to miss a retirement account contribution if it happens automatically. Have money transferred to your 401(k) from your paychecks or to an IRA on payday.

Don't get discouraged if you're not on track for retirement. Besides the above steps, you can also consider annuities, downsizing or working longer than you planned. Also make sure you don’t have any money misconceptions about retirement. Do take action though, as the longer you wait, the more difficult it becomes to catch up.

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Christy Bieber Freelance Writer

Christy Bieber a freelance contributor to Moneywise, who has been writing professionally since 2008. She writes about everything related to money management and has been published by NY Post, Fox Business, USA Today, Forbes Advisor, Credible, Credit Karma, and more. She has a JD from UCLA School of Law and a BA in English Media and Communications from the University of Rochester.

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