401(k) Account Balances by Age: Check Your Position Against Others' Savings

401(k) Account Balances by Age: Check Your Position Against Others' Savings

In the pursuit of a comfortable retirement, financial planning is crucial. Fidelity, a leading investment firm, has provided a set of retirement savings targets to help individuals build sufficient savings relative to their income at each life stage.

By age 30, Fidelity recommends having saved the equivalent of one year's salary in your 401(k). For instance, if you earn $50,000, your 401(k) balance should be about $50,000 by age 30. By age 40, the recommended savings increase to three times your salary, and by age 50, you should have saved between four and six times your salary. Aiming for ten times your annual salary by age 67 (typical retirement age) is the ultimate goal.

Fidelity advises saving about 15% of your pretax income annually from the beginning of your career, including any employer match contributions. If your employer matches 3%, you'd personally need to save 12% to reach this goal over time.

The 4 percent rule, a popular retirement withdrawal strategy, suggests withdrawing 4 percent of your retirement account balance in the first year of retirement and then adjusting for inflation in subsequent years. However, it's essential to remember that these are guidelines and individual circumstances can vary.

According to Fidelity's data, the average 401(k) balance for people aged 35-44 is $103,552, while the median balance reveals that many people have saved quite a bit less than $271,320. The average 401(k) plan balance reached $148,153 in 2024, up from $134,128 in 2023.

For those aged 50 and older, there's an opportunity to contribute an additional $7,500 to their 401(k) plan, for a total of $31,000 in 2025. The median balance for people under 25 is $1,948, indicating that early savings are crucial.

It's important to note that these figures come from Fidelity's analysis and Vanguard's "How America Saves 2025" report, which provides data from nearly 5 million defined contribution plan participants.

In conclusion, Fidelity's retirement savings targets serve as a useful guide for individuals looking to secure their financial future. If you find yourself behind these targets, Fidelity recommends gradually increasing your savings rate, especially during your 30s and 40s, to "catch up" with these benchmarks. It's never too late to start saving for retirement.

Personal finance plays a significant role in investing for a comfortable retirement, and financial planning, as guided by Fidelity's retirement savings targets, becomes crucial. By the age of 30, it's advisable to have saved an amount equivalent to your annual salary in your 401(k), as Fidelity suggests, and this should increase progressively with age, aiming for ten times your annual salary by age 67.

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