I'll always preach the importance of being proactive. It could mean eating healthy and working out to avoid health problems down the road, staying current with car maintenance to avoid getting stuck on the side of the highway, or setting aside money for retirement, even if you're years or decades away. Whatever the case, it's typically in your best interest to be proactive rather than reactive.
Regarding retirement, it's important to be proactive with your savings because saving money alone isn't typically enough to build a nest egg that will last you through retirement. Many people need to also invest that money with enough time and the power of compounding to grow it to the necessary level.
Vanguard recently released its "How America Saves 2025" report, which sheds light on 1,400 defined contribution plans and the nearly 5 million workers who use them to save and invest their money. According to the report, the average account balance was $148,153 at the end of 2024, up 10% from the previous year.
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How do your savings stack up compared to your age group?
Before digging into more numbers from Vanguard's report, it's important to note averages can be skewed by extremely low or high values. While the average account balance across all ages was $148,153, the median (or midpoint value) was $38,176. This gap between the two values indicates some ultra-wealthy individuals pulled the average number higher.
To get a better gist of where you may stand relative to your peers, here's a look at the average and median balances by age:
| Age Group | Average Balance | Median Balance |
|---|---|---|
| Under 25 | $6,899 | $1,948 |
| 25-34 | $42,640 | $16,255 |
| 35-44 | $103,552 | $39,958 |
| 45-54 | $188,643 | $67,796 |
| 55-64 | $271,320 | $95,642 |
| 65 and over | $299,442 | $95,425 |
Data source: Vanguard.
How much should you have saved for retirement?
While it's interesting to see these numbers, they don't mean much without context. An issue with many questions in personal finance is that the answer is usually "it depends." This applies to budgeting, where to invest, when to claim Social Security, and how much you need to save for retirement.
If your goal is to travel the world during retirement, it's safe to assume you'll need more saved than someone who plans to fish at the local lake and pass time people-watching on the porch. That said, a popular baseline that people use is the "80% rule."
The 80% rule says you should aim to have at least 80% of your last working year's annual income in retirement in order to maintain the same lifestyle. For example, if you earned $60,000 in your last year working, you'd want to have $48,000 of annual income in retirement. This percentage can be adjusted to account for major lifestyle changes, but it serves as a good starting point.
Building on that figure, consider using the "rule of 25," which recommends saving 25 times the yearly amount you plan to spend in retirement. If your annual spend in retirement is $48,000, you'd aim to have $1.2 million saved.
What can you do if you're "behind" with your savings
The How America Saves 2025 report is based solely on retirement accounts in plans administered by Vanguard, so the average and median balance data isn't representative of the U.S. at large. However, if you treat the numbers as a reasonable benchmark and feel like you're behind, there are a few things you can do to speed up your progress.
The first step for people saving in a 401(k), which makes up the lion's share of plans included in the Vanguard data, is to ensure they're taking full advantage of any employer match, if one is offered. Contributing anything short of that is essentially leaving free money on the table. If your company will match up to 5% of your salary, the least you should be contributing is enough to claim that full 5%.
Another practical step is to increase your contribution rate. A one or two percentage point increase may seem minimal, but it can add up significantly over time thanks to compounding. An extra $1,000 saved and invested this year could end up being worth many thousands by the time you reach retirement.
There's no magic button you can press to easily boost your retirement savings. It takes discipline and consistency over time. The one thing you want to avoid is doing nothing at all. Know where you stand, where you want to be, and make it a high(er) priority to get there as your finances allow.
