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…

Image
  Letchworth State Park, NY My wife and I (and our Pomeranian Toby) have been slow traveling since our early retirement last August.  We rely on AirBnB or Vrbo when we travel, and this past April was no exception. We chose a monthly rental via AirBNB in the month of April, in a town called Claysburg, Pennsylvania.  The rental was a studio unit that has a bed, a futon, full kitchen and a private bath. On the day of our arrival (April 1st), we were greeted by snow falling at the condo.  It was a beautiful sight to behold! We checked in with no problems and slowly settled in.  The next three days were uneventful.  We did our usual unpacking, then we went shopping for food from a nearby supermarket the following day.  We enjoyed the sights nearby and were having a good time at a new location. By Monday of the following week, our luck had changed for the worse.  The neighbor upstairs did what sounded like to us, either deep cleaning and renovating! We ...
Read more

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

Image
  Classic Room at the Borgata, Atlantic City My wife and I have been going to the Borgata hotel and casino since its opening 18 years ago thanks to my dad.  My dad had a loyalty/player’s card which allowed free hotel stays (comped rooms).  We couldn’t resist free hotel rooms when my dad asked if we wanted to go! Fast forward to now. I now have a loyalty/player’s card that I use to take my parents to the same hotel for free.  Funny how roles switch...My dad used to treat us to free rooms, so now I’m treating him...Favor returned! Borgata Hotel & Casino was built in 2003 to huge fanfare when it opened.  Costing then $1.1 billion, it rivaled the best hotels in Las Vegas and New York City.  It features 2000 rooms, outdoor / indoor pools, a spa, a buffet, 3000+ slot machines, and many high end restaurants. Since its opening, it added the Water Club (a boutique hotel) in 2008 at a cost of $400 million, which added another 800 rooms to the available room capa...
Read more

Review of Falls Lake Dam Recreation Area, Wake Forest, North Carolina

Image
  Falls Lake Dam Recreation Area, Wake Forest, NC After my wife and I sold our home at the end of August 2020, we headed down to Wake Forest, North Carolina.  This would mark the beginning of our early retirement.  We wanted to spend time with my brother in law and his family, who we haven’t seen in over a year.  It was during this visit that we discovered this fantastic recreation area. Falls Lake Dam Recreation Area is a man made reservoir located in the upper portion of the Neuse River Basin, nestled near North Carolina’s bustling Triangle Area.  The reservoir covers nearly 12,500 acres of water and is surrounded by 25,500 acres of public land.   The lake stretches 22 miles upstream to the confluence of three rivers: Eno, Flat, and Little Rivers. Falls Lake Dam Recreation Area boasts hiking trails, fishing, water sports, biking, wildlife viewing, etc. See my notes below when visiting the Recreation Area: The main entrance to the Recreation Area is access...
Read more