Average 401k Balance By Age 2022: Vanguard Retirement Survey
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This video is showcasing average 401k balances and median 401k balances in retirement accounts with Vanguard retirement services.
All of this information comes from Vanguard 401k retirement survey that was conducted in 2021. This is both the average and the median of these 401k retirement accounts. Keep in mind the average 401k retirement account size will be skewed because of the large 401k retirement accounts at the top and the small 401k retirement investing accounts at the bottom.
The median 401k balance is what we are going to focus on in this retirement video. Median 401k retirement investing account values gives us the figure that is right in the middle and is a better indicator for 401k retirement savings.
What this 401k retirement survey showed which was surprising is that 3 in 10 401k participants have 401k balances below $10,000. It also showed that 3 in 10 401k participants had 401k balances above $100,000.
The average 401k retirement contribution in this study was 7.3%. If you are trying to save for retirement, the actual percentage that you need to save to retire comfortably is 10 to 15% of your gross annual income.
Retirement income strategies and retirement income planning are two big pieces to anyones retirement planning calculator. Whether you are wanting to know strategies for “retirement planning at 30”, “retirement planning at 40”, “retirement planning at 50”, or even “retirement planning at 60” understanding how much retirement income that you want versus how much you need gives you a roadmap to follow to and through retirement.
Here at Pearl Wealth Group, we run a trademarked retirement investment and retirement income plan for individuals and families who are wanting to retire called “Your Financial EKG™.” What we are trying to visualize is how long a persons retirement savings are going to last throughout retirement. If you are looking for early retirement planning tips or trying to saving for retirement in your 50’s, You Financial EKG™ is a great tool to help you understand where you are retirement planning. Retirement planning and retirement income strategies shouldn’t be complicated. They should just be done right.
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As people age, planning for their retirement becomes more important. One of the ways people prepare is by contributing to a 401k account. It is, therefore, essential to know the average 401k account balance by age to determine how to prepare for retirement.
According to the Vanguard Retirement Survey, as of Dec. 31, 2020, the average 401k account balance was $121,402 per participant. While this number may seem substantial, it hides a more diverse picture. The average 401k account balance varies significantly by age, as different factors influence people in different stages of life.
Age 20-29: The average 401k account balance for this age group is $13,195, an increase of almost 31% from the average of $10,040 in 2019. This increase is encouraging, considering that members of this age group are usually fresh in their careers and may not have contributed much to their retirement accounts.
Age 30-39: The average 401k account balance for this age group is $47,859, showing a more significant increase of 34% from the average of $35,980 in 2019. Members of this age group have had about ten years to save and invest in their 401k accounts, and it appears that they have taken advantage of this.
Age 40-49: The average 401k account balance for this age group is $120,525, which is about a 34% increase from the average balance of $90,235 in 2019. With more than twenty years in the workforce, members of this age group have had time to accumulate wealth, and the potential for compound interest has likely taken effect.
Age 50-59: The average 401k account balance for this age group is $203,543, which is a 35% increase from the average of $151,899 in 2019. This age group has started to focus more on building retirement wealth and probably earns a higher salary, which enables them to take advantage of the 401k contribution limit for those over 50.
Age 60+: The average 401k account balance for this age group is $251,579, which is almost a 50% increase from the average of $168,118 in 2019. Members of this age group have reached the age of retirement and may have started drawing down funds from their 401k account.
In conclusion, the Vanguard Retirement Survey’s average 401k account balance by age demonstrates that saving for retirement is vital from as early as possible. With compound interest and wise investment strategies, early contributions to a 401k account can lead to substantial retirement savings. Moreover, regardless of age, it is never too late to start preparing for retirement. A strong retirement plan, starting with a 401k account, is a crucial part of fulfilling personal financial goals.
Your Financial EKG™ on March 14, 2023 at 8:13 pm
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Chris Tamson March 14, 2023 at 8:13 pm
Also, those amounts reflect how the market was doing last year: which was terrible!
Sky1on March 14, 2023 at 8:13 pm
I calculate *5 Million to retire*, that is of course if I don't get cancer or any other major medical problem. Basing this on the estimated -15% stock market returns, oil moving to a gold backed currency and as people pull their money out to retire and jobs not being replaced along with the REAL inflation rate of 20% not the one they are telling us and estimated increased taxes to help fun the 150 Trillion in Unfunded Liabilities. Yep, at least 5 Million that is if you plan to retire 5-10 years from now.
Cruz Garzaon March 14, 2023 at 8:13 pm
November 6, 1978 was the introduction of the 401(k) plan. If a 20 year old then contributed it for 45 years, I would like to see who retires in November 2023 and afterwards. That will better put into perspective what it is I need to do to secure my future.
People who have come before me have already done the hard part, I will not let their time go to waste in teaching me what took them so long to learn.
Jesse Fletcheron March 14, 2023 at 8:13 pm
do these numbers differentiate between Traditional and Roth 401k? If I'm around 20% tax rate it seems to me every $100,000 in a Roth is worth about $125,000 in a Traditional, not to mention when I turn 63 the Roth keeps my IRMAA down for Medicare at age 65.
Rob Ton March 14, 2023 at 8:13 pm
I like that, worry about your retirement and what you got going. I bumped my 401k contribution up to 10% last year, was at 7%. I also invest in a brokerage account outside the 401k also, I'm 30 right now and my strategy is long term.
Mark Musicon March 14, 2023 at 8:13 pm
Shocked at how low the numbers are. Wonder how many people in the US don't even have a 401K?
Ray Andersonon March 14, 2023 at 8:13 pm
Wow. It just seems like these numbers are so far off. I'm guessing most people don't dwell on it like those of us who frequent channels like yours do. It is very frightening to consider trying to retire with the amounts most people have and yet they still do retire. I guess there is comfort in that at least.
Dollar Farmson March 14, 2023 at 8:13 pm
Averages and medians are fun to talk about but, as you said, actually pretty irrelevant.
I look at the age 45 because, by that time, most people are adults and should have some idea that retirement looms. At age 35? Not so much. By age 45 you should be reaching pretty high into your income potential.
I believe that age 50 is when people should really start stashing away retirement funds. Kids should be pretty much grown(I still had 2 teenagers)and you should be on the backhill side of your mortgage. Your income is probably approaching it's height. Hopefully you can really start stashing away some funds because you can see AND smell that retirement phase.
If you wait until age 55 to start saving heavily then the impact of time on your money will be substantially less. It's still doable, just harder.
I like to see people wait until at least age 67 to draw SS. If they can retire earlier on their cash savings then great but, if not, they have more years to save and earn dividends, growth, and interest. Take your full SS and determine how much you'll need each month from your other buckets. Make adjustments as circumstances occur. Enjoy life…whatever your financial situation is.
I don't think there are many people dying today whose last wishes are that they had more money.
joe bushon March 14, 2023 at 8:13 pm
cant wait to see the 2022 numbers im thinkin not good