Use These 401(k) Savings Goals, Based on Your Age

When it comes to your 401(k), it’s never too late to start saving—but how much should you save? As your savings tend to increase as you get older, a look at average savings by age group can help track your progress if you’re relying on your 401(k) for retirement. Here’s a look at some new numbers for 2020, according to Fidelity.

It’s worth noting, however, that this is not a full assessment of your retirement preparedness, nor does it factor in your savings, possible inheritance, or other retirement accounts. As only 32% of Americans have a 401(k), a retirement calculator will offer a more accurate assessment of your overall retirement savings progress. Also, Fidelity’s provides average numbers, not median, which means they skew higher due to a smaller pool of millionaires in the data set.

401(k) balances by age
For each age group, benchmark goals recommended by Fidelity are included to help you decide whether you’re on target or need to increase the percentage of your contribution from your income to catch up.

Ages 20-29
Average 401(k) balance: $10,500
The average contribution rate: 7% of compensation
Goal by age 30: save the same amount as your annual salary
It’s not easy to save in your twenties—many people are new to the job market or are still in school—but it’s always good to put away what you can as early as you can, as compound interest is definitely your friend. A dollar saved in your twenties is worth $10 saved in your fifties.

Ages 30-39
Average 401(k) balance: $38,400
The average contribution rate: 8% of compensation
Goal by age 40: 3x your income
By your thirties, you might have been promoted or earn more money—and with any increase in wage you might want to automatically bump up your contribution percentage to stay on track.

Ages 40-49
Average 401(k) balance: $93,400
The average contribution rate: 8% of compensation
Goal by age 50: 6x your income
These are your peak earning years, and by now, your student debt has likely become more manageable or even paid off by your mid-forties.

Ages 50-59
Average 401(k) balance: $160,000
The average contribution rate: 10% of compensation
Goal by age 60: 8x your income
Behind on your savings? Not all is lost. The IRS lets this age group use what’s known as “catch-up contributions,” whereby participants can contribute an extra $6,000 a year to their 401(k).

Ages 60-69
Average 401(k) balance: $182,100
Contribution rate: 11% of compensation
Goal by age 67: 10x your income
Many people start to retire or draw down their 401(k) balance at this age, which means the median balance doesn’t move much. This is the age when your balance begins to drop.

Ages 70-79
Average 401(k) balance: $171,400
Contribution rate: 12% of compensation
Goal by age 79: 10x your income
The recently passed SECURE ACT allows people to hold off on taking required minimum distributions (RMDs) from their 401(k) until the age of 72, instead of 70 and a half years. Most retirees will start to make withdrawals in their 70s, which is why the average total balance is less than the 60-69 age bracket’s average total.

Again, if these numbers scare you, don’t worry—they don’t necessarily reflect the full picture of your finances. You might be wondering then: How much should you save overall for retirement? Ten times your income is a common rule of thumb recommended by Fidelity, but that might go up or down depending on your living standards or expenses. If you’re not sure how much to aim for, meet with a financial advisor who can help you fine-tune your savings plan.

This story was originally published Nov. 12, 2020 and has been updated March 10, 2021 with new information. 


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