Do You Know How Much You Should Have In Your 401(k)? Here's What Experts Recommend Vs. The Actual Average Balance At Every Age

401(k) plans are among the most popular ways Americans save for retirement. They’re so widely used because they offer great benefits like tax advantages, employer match programs, and the ability to automatically deduct savings directly from your paycheck, making it easier to save consistently. For many, these plans are crucial to achieving a secure retirement.

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Understanding where you stand with your 401(k) savings compared to where you should be can help you make necessary adjustments to meet your financial goals for retirement. It’s important to remember that the average or median account balances you often hear about might not directly apply to you. These figures can provide a benchmark, but the right savings target depends on your personal goals, lifestyle, and retirement plans.

Here's a breakdown of what most people have in their 401(k) by age compared to what experts suggest aiming for:

Under 25 Years Old: The average balance is around $5,236, with a median of $1,948. At this stage, the focus should be on saving anything you can, especially to take advantage of compound interest over time.

Ages 25-34: On average, balances grow to about $30,017, with a median of $11,357. Financial advisors often suggest aiming to have the equivalent of your annual salary saved by age 30.

Ages 35-44: The average 401(k) balance is $76,354, and the median is $28,318. By age 40, having three times your annual income saved is a recommended target to stay on track for a comfortable retirement.

Ages 45-54: People in this group have an average balance of $142,069 and a median of $48,301. By the time you hit 50, aiming for six times your annual income can set you up for a more secure retirement. 

Ages 55-64: The average jumps to $207,874, with a median of $71,168. Financial guidance often suggests having at least eight times your annual salary saved by age 60.

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Determining how much to contribute to your 401(k) each year depends on your unique financial situation and goals. A general guideline is to contribute 10% to 15% of your salary, including any employer contributions, starting around age 25.

While a 401(k) is a great retirement savings option, it might not be the only one you need. Depending on your income and situation, an Individual Retirement Account (IRA) could be a valuable addition to your retirement savings plan. IRAs offer tax advantages similar to 401(k)s and may have more investment flexibility. 

Everyone's situation is unique. Although most Americans feel they need nearly $1.5 million to retire, some can do it far less while others might need much more. 

If you're behind on your personal savings goal, it's not too late to make changes and boost those numbers. According to Forbes, "The reality is most people could be saving more." Although this may be questionable for some, others find they could truly be saving more. 

Consider talking to a financial advisor to create a personalized retirement savings plan. An advisor can also help you explore all the various retirement savings options.

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