We all know that comparing ourselves to others can be a slippery slope, but when it comes to retirement savings, it’s hard not to wonder: Am I doing better or worse than the average saver? Checking where your 401(k) balance sits can give you some insight, but remember – your retirement is your own journey and no two paths are the same.
What’s the Average 401(k) Balance?
According to Fidelity, the median 401(k) balance across their accounts is $28,900 as of early 2024.
On the other hand, the average balance sits much higher at $125,900. Before you start celebrating – or panicking – remember that averages can be skewed by those with particularly large or small balances.
The difference between median and average is simple: The median shows the middle saver, while a few million-dollar accounts might pull the average up. So if you’re sitting somewhere between these numbers, you’re likely in line with many other savers.
Here’s a breakdown by age, as reported by CNBC:
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20s: Median $6,700 | Average $17,700
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30s: Median $22,100 | Average $56,200
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40s: Median $41,600 | Average $124,400
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50s: Median $64,300 | Average $212,400
Fidelity reports that the median 401(k) balance for people over 65 is $88,488, while the average is $272,588.
If you’re behind these numbers, don’t sweat it too much – there’s still time to catch up.
How to Boost Your Retirement Savings
Saving for retirement isn’t a sprint; it’s more of a marathon. Even if you’re not exactly where you’d like to be, there are steps you can take to increase your savings and feel more secure about your future.
1. Automate Contributions
The easiest way to ensure you’re saving consistently is to automate it. Set up direct contributions from your paycheck into your retirement account. This way, you won’t even have to think about it. Automating helps you stick to your retirement savings goals by making saving part of your normal routine.
2. Increase Your Contributions
Try bumping it up yearly as you get comfortable with your current contribution rate. Even a small 1% increase can make a big difference over time. Automatically escalating contributions ensures your savings rate grows with your income without manual adjustments.
3. Max Out Employer Match
If your company offers a 401(k) match, ensure you contribute enough to get the full benefit. This is free money – essentially a 100% return on the portion your employer matches. It’s one of the best ways to boost your retirement savings.
What to Avoid: Taking on Too Much Risk
It might be tempting to chase big returns by investing in high-risk investments, but that strategy can backfire. Retirement savings are best treated with patience.
Whether your balance is above or below the average, it’s important to keep your financial goals in mind. Retirement savings aren’t a competition – they’re about ensuring you’re set up for your desired lifestyle.
It might be worth chatting with a financial advisor if you’re not quite where you want to be with your savings or just want some reassurance that you’re on the right track.
