Here's What the Average Person Has in Retirement Savings at 40

How does your savings you compare?

Believe it or not, those turning 40 this year aren't Generation X anymore -- they're millennials. Yes, the generation who came of age in the middle of a housing crash and major recession, who still carry stacks of student loans, and who have been priced out of the housing market by their predecessors are now just a few scant decades from retirement.

If you listen to the experts, everyone should have a healthy six-figure balance in their retirement accounts by the time they turn 40. Unfortunately, the numbers aren't quite up to that mark. But, given everything this generation has faced -- and still is facing, given our current economic climate -- they're not nearly as bad as you might suspect.

Average 401(k) balance around $85,000 to $97,000

Although there's not a nice little data source that breaks down balances by the age year, you can get a rough gauge of the state of things. Specifically, we'll look at data from two of the largest investment brokerages, Fidelity and Vanguard.

For example, Fidelity publishes its age-based data by decade-sized age brackets. For those in the 30 to 39 group, the average defined contribution plan balance is $51,200. If you bump up the 40 to 49 backet, the average balance more than doubles to $121,200.

If you average the two -- since a 40-year-old would presumably be right in the middle of the two groups -- you're looking at an average balance around $85,700.

Vanguard, on the other hand, breaks it down a little differently. We can look at a single bracket: those aged 34 to 44. This group has an average balance of $97,020 in their employer-sponsored retirement accounts.

Averages vs. medians

While those numbers are somewhat encouraging from a broader perspective, the truth may not be quite as hopeful. You see, those are the averages. Folks with sky-high balances can easily skew the averages to the high side.

For a somewhat more realistic view, we can look at the median numbers (that's the number in the middle, meaning half of people have more, and half of people have less).

Fidelity's 30-to-39 age bracket has a median balance of just $18,400. The next group up, those age 40 to 49, are doing about twice as well with a median balance of $37,600. If you average the two, you get a balance of $28,000.

Vanguard's data is slightly better. For their customers in the 35 to 44 age bracket, the median balance is $36,117.

So while some people may be in a fairly good position, just as many are falling well short of the expert-recommended retirement savings goals. But it may not be quite as bad as it looks.

Employer plans are not the whole story

The biggest flaw with this data is that it looks at a very specific subset of retirement savings: employer-sponsored plans. Specifically, active plans with two specific brokers.

What this data doesn't look at is other types of retirement accounts, like IRAs (individual retirement accounts). It also doesn't take into consideration other types of retirement investments like real estate or even business ownership.

Millennials are far more likely than those before them to regularly switch employers (often because it's the only way to get a decent pay raise). They're also increasingly self-employed, making employer-sponsored plans less common than for previous generations.

The long and the short of it is that the data simply doesn't show the whole picture. And while the current crop of 40-year-old investors may not seem to be doing as well as experts would like, they're likely doing the best they can with the cards they've been dealt.