September 8, 2020
By Rahul Iyer
Comparison is not usually the best thing to do for your overall well-being. It can cause you distress when you find that others are doing “better” than you are. Nonetheless, having an idea of how others are doing, in terms of averages, can be a source of motivation or assurance. This depends on which side you sit in terms of the average that applies to your age group. In this article, we will take a look at the average 401(k) balance by average.
The average 401(k) balance in this age group is $11,800. This age group represents those who have just joined the workforce and are just being introduced to retirement saving. If you are in this age group, it is important that you prioritize retirement saving. If your employer matches your contributions, maximize your 401(k) and get as much of that free money as you can. The median 401(k) balance for this age group is $4,300.
The average 401(k) balance in this age group is $42,400. By this age, workers are starting to take retirement saving more seriously. The years that they have spent in the workforce contributes to the size of the average of this age group. It is also likely that individuals within this age group have started to contribute to more than one retirement scheme.
The average 401(k) balance in this age group is $102,700. The jump that happens from the previous age group to this age group is notable. This is because these years include the peak earning years for employees. Experts report that the peak earning age for women is 39 while men peak at 48.
This age group is now eligible for catch-up contributions which permit them to contribute an additional $6,000 to their 401(k) plan. This is a time where those who were a little behind on their retirement savings can improve their status. Of course, you will need the extra cash to place in this plan, so this group will have to rearrange or make provision to contribute the extra funds.
At age 59 ½, you are permitted to withdraw from your 401(k) contributions and begin to start using the money that you have accumulated over the many years you have worked. The typical age that most Americans retire is 66.
Remember that averages do not give the full picture. You may find that your retirement needs are above the average 401(k) balance of your period. If this is so, make the necessary provision to get your savings to a point that you can retire comfortably. If you are below the average for your age group and you are not yet at the 401(k) contribution limit, you can begin to make moves toward increasing your contributions so that you can secure a better financial cushion for your retirement years.