Key Insights and Statistics 2024

Key points

• A 401(k) is a retirement savings plan that may come with an employer match.
• Your age and job tenure may affect how much you save for retirement.
• You can take steps to get back on track with your retirement savings.

Saving for retirement is a marathon. And the earlier you start, the better off you’ll generally be.

One popular way to save for retirement is through a 401(k) plan. The amount you need to save is personal. It depends on various factors, including your income, lifestyle and goals for retirement.

But knowing what others your age have saved may provide a benchmark for your savings. You can use the average 401(k) balance by age to guide your efforts and catch up if you’re behind.

What’s a 401(k) in a nutshell?

“A 401(k) is an employer-provided retirement saving plan with some tax advantages,” said Cassandra Kirby, a certified financial planner and wealth advisor at Braun-Bostich & Associates. “Typically, there is an employer match, which is a nice incentive.”

The employer match may come as a percentage of your income. A 100% match of up to 5% of a $60,000 salary would be a maximum of $3,000 annually. That assumes you put 5% of your income toward your 401(k). 

401(k) contributions are automatically funneled from your paycheck to your account. You can generally deduct those contributions from your taxable income. But you must pay taxes on withdrawals during retirement.

Money contributed to a 401(k) is automatically invested. You may choose a mutual fund or exchange-traded fund, for example. That’s part of the key to long-term growth.

What is the average 401(k) balance by age?

Here are the latest available figures on the average balances by age, based on data from Vanguard.

Average 401(k) balance by age

You can contribute up to $23,000 annually to a 401(k) in 2024. If you started at age 18, that would come to $966,000 in contributions alone by the time you reached age 60. 

Of course, it’s unlikely that you could contribute that much right after high school. And you might need more time to max out your contributions each year.

Tip: If you’re 50 or older, you can contribute an additional $7,500 to your 401(k) in 2024. 

Average 401(k) balance by job tenure

According to Vanguard, your job tenure may also impact how much you save. 

Average 401(k) balance by job tenure

Example of 401(k) contributions

“One way to understand how much one’s 401(k) balance may be at any given age would be to run through an illustration,” said Tim Mazanec, a certified financial planner at The Harvest Group Wealth Management. “Everyone is going to be in a unique position and will have differing abilities to contribute to 401(k) plans. But the following math may act as a guide.”

Assume you begin contributing to a 401(k) plan at age 22. You have a starting salary of $40,000 and receive 3% annual salary increases. You contribute 6% of your salary to the retirement plan. Your employer contributes a full 3% match. The annual rate of return is 6%.

• At age 32, your balance would be approximately $63,000.
• At age 42, your balance would grow to approximately $190,000.
• At age 52, your balance would grow to approximately $444,000.
• At age 62, your balance would grow to approximately $869,000.

Without an employer match, your 401(k) balance at age 62 would be approximately $580,000. That’s a reduction of a third.

“Not everyone is going to be able to contribute to a 401(k) plan each year,” Mazanec said. “People change jobs, lose jobs, can be financially strained and may have parental or other duties that preclude them from contributing.” 

These figures might look daunting. But it’s important to remember they include investment growth and employer matches.

What happens when you’re behind on contributions

There are limits to how much you can contribute to a 401(k). But they’re pretty generous compared with other retirement accounts, including IRAs. 

Upping your contributions is one way to catch up if you feel behind. Other tactics are also available.

Contribute enough to get your full employer match

“One really important thing is that you always contribute up to the match; otherwise, you’re leaving money on the table,” Kirby said.

Some employers make it automatic when you’re hired. This means you have to opt out rather than opt in. If you aren’t sure whether you’re taking advantage of an employer match, it’s worth looking into.

Cut back on spending

Setting a budget can help you find extra funds to contribute. Look for areas to cut back on expenses and increase your contribution proportionately. 

Set automatic contribution increases

Taking advantage of automation is another good idea. 

“Sometimes you can enroll where every year your savings goes up 1%,” Kirby said. “It’s kind of like ‘set it and forget it.’ That can be helpful.”

Put raises and bonuses toward retirement savings

Aim to increase your 401(k) contributions whenever you get a raise. Your company may also let you make 401(k) contributions with your bonus. If that’s the case, consider funneling all or some of your bonus into your 401(k). 

Maximize your IRA contributions

Some savers also have the opportunity to make full IRA contributions. These are $7,000, or $8,000 if you’re 50 or older, in 2024. You can make both 401(k) and IRA contributions every year. 

There are two main IRA types. Each has its own set of rules regarding income limits.

1. Roth IRAs

There are income limits for Roth IRA contributions, made with after-tax dollars. The contribution limit of $7,000 still applies but phases out as your income increases.

• Married filing jointly or qualifying widow(er). You can make a full contribution if your income is below $230,000. You can make a partial contribution if your income is below $240,000.
• Single, head of household, or married filing separately and did not live with your spouse during the year. You can make a full contribution if your income is below $146,000. You can make a partial contribution if your income is below $161,000.
• Married filing separately and lived with your spouse during the year. You can make a partial contribution if your income is below $10,000.

2. Traditional IRAs

There are no income limits for traditional IRA contributions, made on a pretax basis. But there are income limits for how much of your contributions will be tax deductible. These limits depend on whether you or your spouse has access to a workplace retirement plan.

• Retirement plan at work. Your tax deduction may be limited if you (or your spouse) are covered by a retirement plan at work and your income exceeds certain levels.
• No retirement plan at work. Your tax deduction is allowed in full if you (and your spouse) aren’t covered by a retirement plan at work.

How much do you need to retire?

The amount you’ll need to support yourself in retirement varies depending on your circumstances.

Experts say aiming to save 20% of your gross income is a good starting point.

You’ll want to consider several factors when determining how much you need to retire. They include:

• Lifestyle. How do you want to live in retirement? Do you want to maintain your current lifestyle? If so, how much do you earn right now? Do you plan to downsize and live on less?
• Time frame. How long do you have to let your savings grow? The longer the time frame, the more opportunity there is. 
• Risk tolerance. How you invest your 401(k) funds will depend on your risk tolerance. The more risk you assume, the greater your potential gains — and your potential losses.
• Other financial goals. Do you want to pay off your mortgage by the time you retire? Do you want to put your kids through college debt-free? These kinds of goals will factor into your savings decisions.

Our partners

Connect

Match with a financial advisor from a network of vetted fiduciaries.

Get started

Complete the questionnaire and match with an advisor for a free, no-obligation call.

Find your match

Connect with fee-only advisors who fit your priorities

Build your wealth

Review your vetted advisor matches and set up a free consultation

Create a personalized financial plan

Get matched to expert-built portfolios, and receive ongoing advice and annual check-ins to ensure your plan is on track.

INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

Tips for retirement savings

The importance of saving for retirement can’t be understated. But accomplishing this feat can be easier said than done.

The most important step in saving for retirement is ensuring you get your full employer match. Other retirement savings tips can also help.

Start saving today

Whether you’re 22 or 52, today is the best time to start saving for retirement. The more time your savings have to grow, the larger they can become. In fact, your savings could more than double if given 35 years to grow versus 25 years.

Start saving as soon as possible, even if it’s only a few dollars. Every cent counts in the long run.

Don’t be afraid of risk

Investing is essential to help your savings grow to their full potential. Being too conservative can lead to lower long-term growth.

Stocks provide the highest returns over time. They can be volatile in the near term, however. It’s best to lean heavily on stocks when you have 10 or more years until retirement. Shift to more conservative investments, such as bonds, as retirement nears.

Don’t tap your retirement savings early

Early 401(k) withdrawals have consequences. First, they could trigger ordinary income tax and a 10% penalty. Second, you’ll lose out on the potential future growth your funds would have enjoyed if invested. 

Reserve early withdrawals for emergencies. 

Frequently asked questions (FAQs)