Gen Xers Who Saved in a 401(k) for 15 Years in a Row Have This Much on Average -- It May Shock You

You'll often hear that saving for retirement consistently is a good way to build up a solid nest egg. But now, Fidelity has a good way to back up that claim.

In a recent report, Fidelity found that Gen X savers who contributed to a 401(k) for 15 years straight had an average balance of $501,000 as of the end of 2023. That's pretty darn impressive.

It's also worth noting that Fidelity found that the average 401(k) balance among all savers was $118,600 as of the end of last year. So clearly, Gen Xers are way ahead of the game.

To be fair, Gen Xers have had more time to save -- in some cases, a lot more time -- than their younger counterparts. Remember, the youngest members of Gen X today are pushing into their mid-40s, while the oldest are nearing 60. So while Gen Xers with a 15-year history or more of saving in a 401(k) may have more than four times as much savings as the average participant, they may also have four times as many working years under their belts as some savers.

But still, there's an important takeaway here -- if you want to grow a large retirement plan balance, then you'll need to save consistently. There are also a couple of other key steps to take.

Invest your 401(k) wisely

The money in your 401(k) shouldn't just sit in cash. Rather, it's important to invest your 401(k) savvily so your contributions grow over time.

Many 401(k) plans default to target date funds. These funds adjust your risk profile based on how close to retirement you are. Target date funds are clearly a popular 401(k) investment, but they often charge high fees and tend to err on the side of investing more conservatively. So you may not see the most optimal growth in your 401(k) if you limit yourself to a target date fund.

A better bet may be to invest in a few stock-focused index funds and mutual funds. Index funds are passively managed, so you'll typically face lower investment fees there than with mutual funds, where you're actually paying for the expertise of financial professionals to pick investments for those funds. But all told, your returns might be more favorable with index funds, mutual funds, or a combination of both.

Make sure to snag your full 401(k) match

Many companies that sponsor 401(k)s also match worker contributions to some degree. Giving up even a single matching dollar in your 401(k) is something you should try your hardest not to do.

Remember, when your employer funds your 401(k), you then get to invest their contribution as well as your own for added growth. Over time, the results could be huge.

Your path to a $501,000 nest egg may be easier than you'd think

You might assume that Gen Xers with $501,000 in their 401(k)s got there because they contributed a ton of money every year. That's not necessarily true.

Over the past 50 years, the stock market has returned an average annual 10%, so your 401(k) may be capable of doing the same. If so, and you invest $500 a month over 24 years, you'll end up with about $531,000.

But remember, in some cases, investing $500 a month could mean contributing just $250 out of your own paycheck and having your employer put in the rest. So hitting that target may be more than doable.

It's a great thing that many Gen Xers are sitting on a sum of money for their retirement. But if you play your cards right, you could easily end up in the same boat.