Here's The Average Amount Saved In A 401(k) For Someone In Their 30s

As you clock in day after day, you should be stashing away funds into a 401(k). If you're not, here's how you decide if a 401(k) or Roth IRA is right for you. If you are, how well are you doing? How much should you have saved in your 30s? How long must you work to accumulate a reasonable amount in your 401(k)?

These questions inspired Vanguard to publish the "How America Saves 2024" report, which compares the state of retirement savings across 16 industries in the U.S., and Vanguard's overall data. The report shows that the average 401(k) balance for individuals aged 35 to 44 is $91,281; it placed the median 401(k) balance at $35,537. Also, higher earners have larger balances; those making $150,000 annually average $336,470 in their 401(k).

However, it is not limited to your earnings — how you save helps. Vanguard says that automatically taking money out of your paychecks or retirement savings helps people save more. About 77% of the plans do this, and they often start by taking out 4% per paycheck. Each year, they might take out a bit more automatically to help your savings grow.

You might notice that the average 401(k) margin varies by study. For instance, Empower reports much higher average balances compared to Vanguard. For people in their 30s, Empower shows an average balance of $183,623, and for 40s, the average jumps to $382,418. It's higher, sure, but it's not wrong either, as the demography of each report is not the same. 

Empower targets higher-end clients than Vanguard. The former sets the bar high by requiring a $100,000 minimum to start with personal advisory services. Clients who can meet this minimum are generally well-off, and can dive into more complex financial planning. Vanguard sets a more accessible threshold at $50,000. This is to encourage a wider set of investors, including those who might be young, or early in their financial journey. Vanguard also offers low-cost index funds and ETFs — investment options that are priced low — that cater to budget-conscious investors who want straightforward financial planning without customized services. 

All these suggest that factors beyond just your age, influence your 401(k) balance. While age does have its place — people can save more as they get older, and earn higher salaries — your income level, the percentage of income you save, employer matching contributions, the length of time you have been saving, and the investment choices will determine 401(k).

To understand how much you should save as you grow older, Fidelity has a benchmark. By age 30, they recommend saving the equivalent of your annual salary. This increases to three times your income by 40, six times by 50, and eight times by 60. By 67, your savings should equal 10 times your salary, enough to maintain your lifestyle during retirement (avoid this common 401(k) mistake, it could cost you a fortune). 

To simplify, on your $50,000 a year income, aim for $50,000 by age 30, $150,000 by 40, $300,000 by 50, and $400,000 by 60. At 67, your savings should be 10 times your annual income, reaching $500,000. You can hit these targets by starting early because your investments will gain compund interest over time. Target 15% of your income, counting any employer matches. If you already contribute to a 401(k), up your contributions or add catch-up contributions after 50. If you struggle to stay consistent, set up automatic contributions to your 401(k).