When you mention a retirement account, most Americans likely think of a 401(k). It’s by far the most popular and used retirement account in the country, which makes sense when considering its benefits.
Not only does a 401(k) allow you to save and invest for retirement, but it also gives you a tax break for doing so by allowing you to lower your taxable income in the year you make contributions. It’s a win-win.
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How does your 401(k) balance compare to those 65 and older?
Considering how important 401(k)s are to people’s retirement finances, it makes sense that someone would want to know where they stand compared to their contemporaries. According to Vanguard’s “How America Saves” 2024 report, the average 401(k) balance for someone 65 and older is $272,588.
As with any statistic dealing with averages, it could be skewed by those on either the low or high extreme, so I want to note that the median balance for those 65 and older is $88,488.
How much should you have in your 401(k)?
It’s difficult to say how much someone should have in their 401(k) because that largely depends on their retirement plans and location. For example, someone retiring near the beach in Miami likely won’t need the same amount as someone retiring in a small town in Montana.
That said, a common goal is to have 80% of your last working year’s income annually in retirement. For example, if you made $80,000 in your last year working, you’d aim for $64,000 annually in retirement. If you made $100,000, you’d aim for $80,000, and so forth.
The 80% rule is far from foolproof, and all the money doesn’t have to come from your 401(k), but it’s a good broad baseline you can use and adjust accordingly to your personal situation.
