Millions of workers risk retiring without enough money to keep up with their expenses, and the reason generally boils down to inadequate savings. But while it's one thing for lower earners with limited income to fall behind on their retirement plan contributions, it's another thing for higher earners to make that same mistake. Yet new data from Ascensus proves that even folks who earn $100,000 or more per year aren't contributing as much to their retirement plans as they should be.

Among individuals earning $100,000 or more annually, here's how their average 401(k) balances broke down as of the end of 2017:

Age Range

Average 401(k) Balance

Under 25

$20,037

25-34

$37,404

35-44

$76,872

45-54

$147,689

55-64

$247,607

65 and over

$344,285

DATA SOURCE: ASCENSUS.

When we look at some of these numbers, they might seem respectable at first -- particularly the average $344,285 balance accumulated by older workers. But when we take the time to understand what those numbers mean from a practical standpoint, they become far less impressive.

Most seniors are advised to withdraw about 4% of their nest egg's value each year. Doing so increases one's likelihood of having those savings last for about three decades, or so a host of financial experts have claimed for years. But when we apply that 4% withdrawal rate to a balance of $344,285, we arrive at just $13,771 in annual retirement income.

To give that figure some context, the U.S. Bureau of Labor Statistics reports that adults 65 and over spend an average of $46,000 per year. Meanwhile, the average Social Security beneficiary stands to collect $17,532 a year as of 2019. When we add in the $13,771 from above, we arrive at $31,303, which is almost $15,000 shy of the $46,000 the typical senior needs.

Man counting hundred-dollar bills.

IMAGE SOURCE: GETTY IMAGES.

To be fair, the above figures don't include assets held outside of a 401(k). In other words, it's possible that among those higher earners, many hold funds in an IRA, traditional brokerage account, or savings account on top of the 401(k) balances noted above. That said, it's also reasonable to assume that someone with a 401(k) may not have any other meaningful sources of retirement income outside of Social Security, thereby placing a pretty hefty burden on savings alone.

Another caveat is that while the average Social Security beneficiary will collect $17,532 a year, those entitled to the maximum payout at full retirement age will collect $34,332 a year instead as of 2019. And since folks earning above $100,000 are more likely to qualify for that maximum benefit, it may be more equitable to use the latter figure rather than the former. If that's the case, then higher earners retiring with a $344,285 nest egg may be looking at $48,103 a year, on average, which is right above that $46,000 sweet spot.

Then again, that $46,000 represents what the typical senior spends. Folks who are used to earning more might enter retirement with higher (costlier) expectations and wind up disappointed when they find that they're looking at a mere $4,000 a month and change to work with.

Another thing to keep in mind is that traditional 401(k) withdrawals are subject to ordinary income taxes in retirement. It's only those lucky folks with Roth-style accounts who get to shield their withdrawals from the IRS.

All of this boils down to one thing: Higher earners may need to step up their game if they want their retirement to play out the way they've envisioned it. And the sooner they do, the better their chances of substantially boosting their income when they're older.

Ramping up savings

Folks under 50 who save in a 401(k) have the ability to contribute up to $18,500 annually at present, while those 50 and over can sock away up to $24,500. For 2019, these limits are increasing to $19,000 and $25,000, respectively.

This means that a 60-year-old with $247,607 (the average balance for that age) who maxes out a 401(k) for seven more years starting in 2019 stands to retire with about $614,000, assuming an average annual 7% return on investment during that time.

Those whose savings aren't quite up to snuff can also explore the option of working longer. A 60-year-old with $247,607 who maxes out a 401(k) for 10 years instead of seven could retire with more than $832,000, all other things being equal. That jump is due in part to three more years of contributions combined with added investment growth.

Though higher earners are doing a decent job of setting aside funds for the future, many need to do better if they want to enjoy a retirement lifestyle that mimics the one they've grown accustomed to. And the sooner they recognize that, the more opportunity they'll have to take action.

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