Here's the Average IRA Balance. How Does Yours Compare?

It's really important to do what you can to build up retirement savings. Seniors who retire on Social Security alone often struggle financially due to the limited replacement income those benefits provide. 

Now, many people have access to a retirement plan through their employers in the form of a 401(k) or 403(b). If you don't, there's always the option to open an IRA with a brokerage firm. Anyone with earned income can open one of these accounts and save for retirement. 

Recent data from Fidelity shows that as of Q4 2023, the average IRA balance was $116,600. If your balance is higher than that, you may be feeling pretty darn good right about now. But don't worry if your balance is lower. If that's the case and you're not on the cusp of retirement, you're definitely not doomed.

Why averages can be misleading

The fact the average IRA balance is $116,600 might satisfy a point of curiosity for you. But you don't need to panic if your balance is lower.

One piece of data Fidelity doesn't provide along with the average IRA balance is the average age of IRA savers. If that age is 45, and you're 35, well, it means the typical IRA holder has had an extra decade to make contributions and accumulate a higher total than you. So don't assume you're in bad shape for retirement if your IRA balance is lower -- even if it's a lot lower. 

As an example, let's say you're 35 with $58,300 in your IRA today -- half of the average balance. Even if you don't add another dollar to your IRA, but rather, leave your $58,300 to sit and grow, in 10 years, you may be sitting on about $151,000, assuming an average annual 10% return on your IRA's investments. That 10% is in line with the stock market's average return over the past 50 years.

Make sure you're investing your IRA aggressively enough

While you don't need to stress if your IRA balance isn't quite as high as the average, one thing you do want to make sure of is that your IRA has enough stock exposure. The 10% return we just discussed may not be feasible if you play it too safe in your IRA with too much invested in bonds. So as long as you're not on the verge of retirement, it often pays to have plenty of stock exposure.

The nice thing about IRAs is that these accounts allow you to invest in stocks individually. With a 401(k), by contrast, you're generally limited to different funds, like index and mutual funds, where you can't hand-pick your stocks yourself. 

If you're not comfortable selecting individual stocks for your IRA, you can always fall back on broad market ETFs, or exchange-traded funds. That way, you get instant diversification without having to do a ton of stock-related research. 

The average $116,600 IRA balance today is most likely a result of contributions plus investment gains. And it's in your best interest to set yourself up with plenty of the latter.