Have you ever gotten halfway through a road trip, realized you forgot to pack snacks, and faced the daunting prospect of gas station junk food for the rest of the journey? That sinking feeling can be like reaching retirement with an underfunded 401(k). While cruising along on autopilot might seem okay for now, it could lead to a retirement filled with financial stress instead of relaxation.

We humans seem to like comparison a lot. Comparing your 401(k) balance to national averages can be a helpful comparison. You can use the savings of others to help map your own retirement, copying what others have done successfully. 

However, staying on course isn’t just about matching what everyone else is doing – especially if they aren’t even on the same road trip as you! You’ll need to make personalized adjustments based on your starting point, desired pit stops, and scenic detours you may encounter along the way. 

We’ll explore the average national averages by age for 401(k)s. However, we’ll also take a look at factors that may impact where you need to be, like wanderlust-fueled travel plans and student loan debt. 

So, buckle up, and let’s get your retirement savings on track for a smooth ride through your golden years!

Mapping Your Route: Average 401(k) Balances by Age

Like any good road trip starts from home, figuring out your retirement savings needs to start with understanding where you stand. You can use the average balances of others in your age group to determine if you’re ahead or behind the curve. 

Think of these as mileage markers along the highway, giving you a general idea of how far others have traveled at similar points in their journey. 

However, they are about others’ journeys—not your own. Therefore, you cannot rely on these averages alone. 

The table below shows the average 401(k) balances for different age groups. We got all of these averages from Fidelity. According to Fidelity, savings have decreased slightly due to market activity (not necessarily how others are saving).

Overall, the average 401(k) savings rate is 13.8% in 2022. That’s lower than the 15% Fidelity recommends you save each year for retirement. However, those in their 60s invest the most into their retirement, likely because they’re nearing retirement. 

Age Group	Average 401(k) Balance
20s	$10,500
30s	$38,400
40s	$93,400
50s	$160,000
60s+	$232,710

As you might expect, the overall 401(k) balance rises steadily over time, reflecting the power of compound interest (sadly, not something that works during road trips). However, again, it’s important to note that this is just a general picture. Remember, a truly “average” person doesn’t exist. 

Customizing Your Journey: Factors Beyond Averages

The average 401(k) balances we just examined can be a great starting point. However, your retirement roadmap should be customized to your specific plans—just like a road trip. We recommend considering several factors when personalizing your 401(k) investments. 

Your Starting Point

Not everyone starts their retirement savings at the same point. Many factors change how much (or little) you may need to save:

• Student Loan Debt: Large student loans can prevent you from prioritizing your 401(k) early on. 
• Early Career Earnings: If you have a lower salary in your 20s, it may limit how much you can contribute. 

In some cases, you may need to accept that your savings will be lower during your 20s and 30s. If this is the case, plan on increasing your monthly savings later – after your loans are paid off or when your earnings increase.

Desired Pit Stops

When you say “retirement,” different people envision different things. Sometimes, this means spending most of your time in your (paid-off) home and babysitting the grandkids. Other people may want to travel tons. 

• Early Retirement: If you plan to retire before the traditional age of 65, you’ll need to save more aggressively during your early years. Of course, many people plan on retiring, but unexpected events can get in the way. In fact, around 11% of workers plan to retire before the age of 60. 
• Travel Plans: If you’re going to travel extensively, you will need more money saved up. Factor in the additional costs and adjust the savings amount you need to aim for. 
• Place: The place you plan on retiring also has a huge effect on how much you’ll need to save. Check out our article about the most and least expensive states to retire in for a full rundown. 

You must consider what you want to do in your retirement when saving. Don’t just hit the averages on the table above and think you’re good! 

Detours

Life doesn’t always go as planned. As the military is famous for teaching: “No plan survives first contact.” Therefore, it’s important to assume and plan for unexpected events as best you can. 

• Job Loss: A period of unemployment can derail your savings plan. Not only can you no longer save, but you may even need to dip into your savings. We highly recommend building an emergency fund to bridge these gaps. 
• Medical Emergencies: Unexpected medical bills can be a huge financial strain. Having adequate health insurance can help minimize the impact on your retirement savings. However, emergencies still happen. 

It’s always best to aim a bit higher than what you need. If something unusual happens, you’ll be a bit more covered. 

Staying on Couse: Tips for Reaching Your Retirement Destination

Once you’ve figured out your personalized roadmap, staying on track is important. Of course, this is the harder part. Many people have a retirement plan but find saving for it challenging. It requires real, everyday sacrifices. (Do you really need Taco Bell again?)

Here are some practical tips to help fuel up your savings:

• Increase Your Contribution Percentage: Even a small bump in the percentage you save can make a big difference over time, especially when you’re younger. Plan to save a percentage, not a particular amount of money. This way, your contribution will increase with your income. 
• Don’t Miss Out on Free Money: Retirement savings are surrounded by rules. However, it’s important to understand these rules so you don’t miss out on free money. For instance, most employers offer to match contributions in your 401(k) up to a certain point. Plan to contribute at least this amount to capture the match. It’s free money!
• Diversify Your Portfolio: Spread your investment across several different asset classes to help mitigate risk and improve your savings’ health. Most 401(k) plans allow you to invest in several options. 

Of course, it’s important to have a long view when saving for retirement. You may not take advantage of those savings for a long time, but you’ll thank your past self when you reach retirement age!

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