Here's How Much the Average 30-Year-Old Has in Their 401(k)

There are many benchmarks you can use to figure out if you're on track with your finances or not. And when it comes to retirement, your 401(k) balance can have a big impact on your life. Thanks to compound interest, it will determine just how comfortable you'll be and help shape what's possible for your golden years.

Here's what the average person has in their account by age 30, and what you should know if you're behind.

The average 30-year-old has $30,000 in their 401(k)

According to Vanguard, the average 401(k) account balance total for someone aged 25 to 34 is $30,017, with a median balance of $11,357, based on the latest available data. To put that into context, if you were not to touch that money for the rest of your life (including making no further contributions), you'd have about $231,000 by the time you turned 65. That's certainly better than nothing -- but there's also much room for improvement, especially considering most Americans estimate they'd need about $1.8 million to retire comfortably.

Of course, the only way you'll know if you're on track with your savings is to understand how much you'll actually need based on your desired lifestyle. For example, someone who plans on living modestly and spending $50,000 a year in retirement won't need to save as much as someone who wants to travel and live a more lavish lifestyle. So "enough" is relative.

A retirement calculator is an excellent tool to help you figure out if you're behind on your retirement savings or not. But as a general rule, you should try to have your annual salary saved by age 30, and three times that much by age 40.

How to catch up if you're behind on retirement contributions

If you do find that you haven't saved enough money for retirement given your age, there are still steps you can take to help catch up -- though it's admittedly more difficult because you won't have as much time to take advantage of compound interest.

Here are a few tips to get you started:

• Do the math: If you know how behind you are, you'll be better positioned to actually reduce that gap, either via higher contributions or adjusting your expectations for what your retirement will look like. The more detailed you can get with your retirement need calculations, such as what your actual budget may look like on a month-to-month basis, the better.
• Make sure to score all retirement matches: Even if you aren't in a position to max out your 401(k), if you can afford to contribute as much as is needed to get the maximum employer contribution match, that's the best option. That way, you'll get that free money even if you're only contributing, say, 3% of your annual salary.
• Consider an IRA: Many Americans are eligible to contribute to both a 401(k) and an IRA at the same time, and the contribution limits for those are separate. So while you can contribute up to $22,500 a year to a 401(k) for the 2023 tax year, you can contribute an additional $6,500 per year to an IRA, boosting your total contributions. You can open an IRA with many brokerage firms, and they offer a wider range of investments than a 401(k).
• Take advantage of any catch-up contribution amounts: If you're 50 or older, you can contribute more each year toward retirement as a part of the "catch-up" contributions rule. That lets you add an extra $7,500 per year toward a 401(k), and an extra $1,000 per year into an IRA.

Saving enough for retirement can be difficult. But if you take a strategic approach and give yourself time to catch up, you can create a retirement that not only meets your basic needs but lets you live a fulfilling post-work life.