Have you ever wondered how your IRA or 401(k) balance might compare to what other people your aged have saved? If so, you're surely not alone.
It can be argued that comparing your savings to other people's isn't helpful, since everyone's expenses are unique. But there can be some value in seeing what the typical person your age has saved for retirement so you have some sort of benchmark to work with. So if you're curious about the average retirement plan balance by age, let's dive in.
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What the numbers look like
There are different sources we can use to see what the average American has saved for retirement. But one of the most comprehensive sources is none other than the Federal Reserve. Based on its analysis of retirement plan balances in 2022, here's what the typical American has saved by age.
|
Age Range |
Average Retirement Savings Balance* |
|---|---|
|
Under 35 |
$49,000 |
|
35-44 |
$141,000 |
|
45-54 |
$313,000 |
|
55-64 |
$538,000 |
|
65-74 |
$609,000 |
|
75 and older |
$462,000 |
Data source: Federal Reserve. *Note that balances are rounded to the nearest thousand.
If these numbers seem higher than what you'd expect them to be, you should know that the median savings balance among each age group is considerably lower. Averages take a wide range of balances into account, including those that are very large.
So don't panic if your IRA or 401(k) balance isn't anywhere close to the number above that corresponds with your age range. But also know that there are steps you can take to give your nest egg a nice boost.
How to grow your savings
If you're on the younger side and your retirement plan balance is "behind" compared to the numbers above, try not to stress. This means you have many years to catch up. And you shouldn't necessarily stress if you're older, either.
First, think about how much savings you actually need. If you're 62 with $300,000 socked away for retirement, that may be enough if you intend to keep your expenses low and hold down a job to avoid getting bored.
But also, take strategic steps to grow your savings if you're not happy with what your IRA or 401(k) looks like. An easy win is to snag your complete employer match if your 401(k) plan offers one. The more free money you get for retirement, the easier it becomes to boost your balance.
At the same time, make sure you're investing in assets that allow your money to grow without charging you hefty fees along the way. If you have a 401(k), that could mean reconsidering the fee-heavy mutual funds you've been relying on and trading them in for low-cost index funds.
Also, aim to take advantage of catch-up contributions in your IRA or 401(k). Granted, with an IRA, you're only looking at an extra $1,000 per year. But with a 401(k), you get a much bigger opportunity to put extra money into your account.
In 2024 and 2025, savers aged 50 and over can contribute an additional $7,500 to a 401(k). And if you'll be between ages 60 and 63 in 2025, you'll have an even larger catch-up of $11,250 you can make instead of just $7,500.
Remember, average retirement plan balances don't always tell the whole story. But if you're not happy with the amount of money you've saved to date, take steps to ramp up so you're able to approach your senior years with more confidence.
