It'southward imperative that you lot're financially prepared for retirement. Living on Social Security lone is difficult, then you'll want an additional source of income. For most people, that extra money must come up from retirement savings.

A 401(k) is a popular retirement investment account used by millions of U.S. workers, in large part because this account offers generous tax advantages. Considering it's administered past employers, it's convenient to invest in.

If you have access to a workplace 401(k), saving in it early and aggressively could provide a path to a secure retirement. But how have Americans done with investing in their 401(m) accounts? Cheque out the average 401(grand) residual by age and income level to see where you lot stack up when it comes to your retirement savings.

The average 401(grand) balance by age

Each year, Vanguard collects data from approximately v 1000000 retirement accounts. Based on its analysis in 2021, the average 401(thou) balance was $129,157 in 2020, upwards from $106,478 in 2019. However, averages varied essentially by historic period. The table below shows the average and median balances for individuals in different age groups.

Age Average 401(thousand) Balance Median 401(grand) Rest
Younger than 25 $6,718 $2,240
26 to 34 $33,272 $13,265
35 to 44 $86,582 $32,664
45 to 54 $161,079 $56,722
55 to 64 $232,379 $84,714
65 and older $255,151 $82,297

Information source: How America Saves, Vanguard.

Boilerplate 401(k) balances at 30

Many fiscal experts recommend that your savings at age 30 equal at to the lowest degree ane yr of your salary. The Bureau of Labor Statistics (BLS) reports the boilerplate bacon for workers ages 25 to 34 is $48,620. That means many thirty-year-olds in the U.S. have an average balance that falls short of the recommended corporeality.

Average 401(thou) balances at forty

Yous should aim to take at least three times your annual salary saved for retirement by age 40. Workers ages 35 to 44 have an boilerplate salary of $59,748, according to the BLS. A worker earning the average salary would desire to take around $179,244 saved. Again the average and median 401(m) balances fall short.

Boilerplate 401(thousand) balances at 50

Past the time you hit 50, you should have half-dozen times your salary invested for your afterward years. The BLS reports the boilerplate salary for workers aged 45 to 54 is $sixty,788. This would mean a typical worker should take savings of around $364,728.

Average 401(thousand) balances at lx

Finally, by age 60, you should have viii times your final salary, and, by age 67 (full retirement age for many in the U.S.), you should have x times your terminal bacon. Past this point, workers are getting very close to retirement and should ideally accept a substantial nest egg.

How much could your 401(thousand) grow?

The earlier yous get-go investing in your 401(k), the easier it is to build a hefty balance thanks to compound earnings.

When y'all invest money, your investments earn coin for y'all. This can be reinvested so you and then take a larger pool of assets earning returns. Your money can grow exponentially. That's why Albert Einstein was famously quoted every bit describing compound interest equally the "eighth wonder of the globe."

The chart beneath shows how much $1,000 invested in your 401(k) could plough into by age 67, depending on when you make your $1,000 investment and assuming an 8% boilerplate annual rate of render.

Age When You lot Invest Your $1,000 Value of $1,000 Investment at Age 67
20 $37,232
30 $17,245
40 $seven,988
fifty $three,700
lx $ane,713

Table by author.

While it may be a challenge to salve when you're immature, information technology pays to practise so.

The average 401(g) residual by income level

Non surprisingly, income impacts the amount workers invest in their 401(m). The table below shows the average business relationship balance based on income level.

Income Range Boilerplate 401(m) Remainder Median 401(k) Remainder
Below $fifteen,000 $16,524 $2,557
$15,000 to $29,999 $15,766 $4,866
$30,000 to $49,999 $29,719 $x,317
$50,000 to $74,999 $69,438 $28,880
$75,000 to $99,999 $121,570 $58,572
$100,000 to $149,999 $193,944 $100,833
$150,000 and up $354,569 $195,076

Table source: How America Saves, Vanguard.

Higher earners need more money saved for retirement because, in nearly cases, they are used to a college standard of living. They will demand their retirement investment accounts to produce sufficient funds to maintain their lifestyle after their paychecks cease.

Many workers contribute a fix pct of income to their 401(k), such as ten%. With this pct-based arroyo, college earners inevitably invest more for retirement each year than their lower-earning counterparts.

Average 401(k) balances by gender

Gender tin can also affect 401(k) balances. In detail, men take much higher boilerplate balances than their female person peers.

This is explained by many factors, including the gender wage gap (men tend to earn more than women) and the fact that women may have fewer years on the job considering they are more likely to take time off due to caregiving responsibilities.

The tabular array beneath shows the average and median 401(k) balances past gender.

Gender Average 401(k) Balance Median 401(thousand) Residue
Male $156,121 $42,516
Female $107,147 $29,095

Tabular array source: How America Saves, Vanguard.

Unfortunately, women often face an uphill boxing in investing enough for a secure future -- especially since they tend to alive longer than men and need larger balances as a result.

Boilerplate 401(grand) balance at retirement

Many U.S. workers retire by the time they attain 65. Vanguard's data shows the average 401(k) balance at retirement to be $255,151, while the median balance is $82,297.

For retirees post-obit the 4% rule, the average residue would produce just $10,206 in annual retirement income, while the median would provide only effectually $3,291. Even when combined with Social Security, this may not be sufficient to provide a comfortable income in retirement.

Aim to invest as much as possible in your 401(thou) and other retirement accounts

A 401(k) tin be a convenient and simple way to save for retirement, although you have other options, including traditional IRAs and Roth IRAs.

You should exist investing in these retirement plans throughout your career with the goal of amassing a nest egg big enough to run across your needs. If you aren't hitting your investment targets, consider advisedly reviewing your budget to find more than opportunities to salve. As you earn bacon increases, y'all may besides want to salvage those raises in your 401(k) rather than spending the extra income since this can make it easier to hit your savings targets.

Past automating contributions to a 401(k) and aiming to save 15% or more of your income for retirement throughout your career, you could finish up with a 401(k) residue well above the boilerplate or median for workers in the U.South. Hopefully, you'll take a more than secure retirement for doing so.