How do your retirement savings measure up to those of others your age? Now, you can find out.
The average 401(k) account balance is now $104,000, according to the latest quarterly analysis by Fidelity Investments.
The average balance by age, however, ranges from a low of $4,400 among folks in their early 20s to a high of about $195,000 among savers in their early 60s.
These numbers broken out by age group — from a recent report by Money — offer you a rare chance to gauge how your own retirement savings stack up against that of the average person in your phase of life.
Here’s the breakdown:
- Ages 20-24 — average 401(k) account balance of $4,400
- 25-29 — $14,400
- 30-34 — $30,500
- 35-39 — $54,700
- 40-44 — $87,400
- 45-49 — $118,600
- 50-54 — $155,700
- 55-59 — $193,500
- 60-64 — $195,200
- 65-69 — $187,200
- 70+ — $180,800
How much should you have saved?
If your 401(k) balance falls short of that of your peers, you shouldn’t necessarily fret. The total amount of retirement savings that you have accumulated is what matters in the big picture.
So, how much retirement savings should you have amassed by now? That depends.
If you ask Fidelity, for example, the wealth management giant will presumably cite its own rule of thumb. It boils down to saving 10 times your preretirement salary by age 67.
Here’s how it breaks down by age, according to a recent Fidelity blog post:
- By age 30 — save one times your salary
- 35 — two times your salary
- 40 — three times your salary
- 45 — four times your salary
- 50 — six times your salary
- 55 — seven times your salary
- 60 — eight times your salary
- 67 — 10 times your salary
One size does not fit all
The trouble with such rules of thumb is that everyone’s financial needs and wants are different.
Even Fidelity’s seemingly simple rule of thumb is based on a lot of assumptions. They include that you:
- Have been saving 15 percent of your income every year since age 25
- Experience constant wage growth of 1.5 percent
- Live off 45 percent of your pre-retirement income in retirement
- Retire at age 67
- Live to age 93
- Have no pension income
So, unless that describes you to a tee, you probably shouldn’t trust your golden years to Fidelity’s rule of thumb alone.
The truth about saving for retirement
Now that we’ve effectively shot down the whole notion of retirement rules of thumb, it may seem we’re back to square one: the question of much you should save for retirement.
But the truth is pretty simple. As Money Talks News founder Stacy Johnson once wrote:
“At the end of the day, the amount we should all put aside for retirement is the most we can. You don’t need a calculator to tell you that’s the sole determinant of the quality of retirement you’ll have and when it will begin.”
In other words, stop fretting over the balance of your 401(k) or any other account and start focusing more on increasing that amount as much as possible.
The worst thing you can do is to do nothing. Stacy recently wrote about this in “How Do I Know I’ll Have Enough to Retire?” He talked about how people approaching retirement often are afraid they can’t save enough:
“So, they don’t do anything. Dumb idea. Do something. … The sooner you start confronting your retirement reality, the better off you’re going to be.”
If you’re unsure how confront your own retirement reality, start by checking out:
- “Ready to Rescue Your Retirement in 2018? Here’s How“
- “How to Save $500,000 in 15 Years“
- “18 Moves That Will Help You Retire Early and in Style“
So, what’s your take on retirement savings goals? Sound off below or on our Facebook page.
This article was originally published on MoneyTalksNews.com as 'Find Out How Your 401(k) Savings Stack Up Against Others Your Age'.