Saving for retirement can feel overwhelming, but it’s all about taking steps forward—no matter where you’re starting. Whether you’re building your first 401(k) balance or have been contributing for years, understanding average savings can offer perspective and motivation. Let’s explore typical 401(k) balances, why they vary, and how you can grow yours, no matter your situation.
The Average 401(k) Balance
According to Fidelity, the average 401(k) balance was $108,200 in 2023. But averages only tell part of the story. These balances change a lot depending on your age and how long you’ve been saving:
- 20s: The average balance is about $6,000—most people are just starting their savings journey as they enter the workforce.
- 30s: Balances average $35,000, as people begin to save more consistently.
- 40s and 50s: Balances climb to $97,000 and $179,200, as contributions increase and compound interest takes effect.
- 60s and Beyond: At retirement, balances often exceed $220,000 on average, reflecting decades of saving.
These numbers vary widely, so don’t worry if yours doesn’t match exactly. What’s important is to start—and stay—on your path.
Why Do Balances Differ So Much?
There are many reasons why people’s 401(k) balances differ. For example:
- Income and Employer Contributions: Higher salaries and employer matches lead to bigger savings.
- Start Date: The earlier you begin saving, the more time your money has to grow through compound interest.
- Contribution Rates: Saving even a small percentage of your paycheck adds up. While Fidelity recommends 15% of your income (including employer matches), contributing what you can is always better than nothing.
It’s Never Too Late to Start
If you’re behind on retirement savings, don’t worry—you’re not alone, and there’s plenty you can do. Even starting small can make a difference:
- Catch-Up Contributions: If you’re over 50, you can contribute an extra $7,500 to your 401(k) each year.
- Employer Matching: Take full advantage of employer match programs—they’re essentially free money for your retirement.
- Adjust Your Budget: Increasing your contribution by just 1–2% of your paycheck can make a big difference over time.
Final Thoughts: Start Today
Saving for retirement isn’t about perfection—it’s about progress. Whether you’re contributing $10 a paycheck or maxing out your 401(k), every bit counts. The earlier you start, the more time your money has to grow. But even if you’re starting later, focused efforts can still create a meaningful nest egg for your future.
The key takeaway? Don’t delay—review your 401(k) or open one if you haven’t already. If your employer offers matching, aim to contribute enough to get the full match. Small steps now can lead to big results down the road.
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