There are few, if any, tools as effective for saving for retirement as a 401(k). It's a win-win: You get to save and invest for retirement, securing your future, and you get a tax break along the way by being able to lower your taxable income in the year you make contributions.
For many people, a 401(k) will be their largest source of retirement income, so it's natural to wonder how your savings stack up against your peers' and if you're saving enough. According to statistics released by Fidelity, the average 401(k) for millennials -- those born between 1981 and 1996 -- is $67,300.
It's not time to press the panic button yet
Before deciding if you're lagging behind in 401(k) savings, it's important to note that low or high balances can skew averages, so these numbers shouldn't be taken as a definitive benchmark. That said, if your 401(k) savings aren't where you want them to be, there's still time, as the oldest millennials are 44 and have around two decades until retirement.
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The best thing you can do at this point is move 401(k) savings up higher in your financial priorities. That doesn't mean increasing your contributions to the point where it could jeopardize your current livelihood. However, even slight increases can make a huge difference over time -- especially with the power of compound earnings.
I recommend that you review your current contribution rate, make sure you're taking advantage of your full employer match (if it's offered), and decide if you need to cut expenses somewhere in order to be able to comfortably increase your contributions.
