Each person’s approach to retirement planning is distinct, and your objectives might not align with those of your peers. However, it’s often useful to gauge how your savings stack up against the national average.
Let’s look at the typical 401(k) savings for those nearing retirement age and explore a straightforward strategy to enhance your savings.
Average Savings May Be Lower Than Expected
At the beginning of the year, Vanguard unveiled its 2024 How America Saves report, which offers insights into the financial status of the average American. The report includes data on average and median 401(k) balances for those who have retirement accounts with Vanguard.
For individuals between the ages of 55 and 64, the average 401(k) balance stands at $244,750. However, the median balance provides a clearer picture of what most people have saved.
Since averages can be heavily influenced by high earners who have amassed millions for retirement, the median—which represents the middle value where half have more and half have less—offers a more typical view. The median 401(k) balance for this group is reported to be only $87,571.
A Simple Tip to Boost Your Savings
While $87,000 is a substantial sum, it might not sustain a typical retirement for more than a few years. If you find your savings lacking, one of the easiest ways to ramp up is by maximizing your employer’s 401(k) match.
According to the Vanguard report, the most commonly offered 401(k) match is 50% of an employee’s contributions up to 6% of their salary. This arrangement can significantly increase your savings by thousands of dollars annually. If you aren’t contributing enough to get the full match, you’re essentially passing up free money.
Building a retirement nest egg is challenging, but adopting simple strategies can facilitate the process. By employing effective saving techniques, you might end up saving far more than you initially thought possible.
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Passionate about analyzing economic markets, Alice M. Carter joined THE NORTHERN FORUM with a mission: to make financial concepts accessible to everyone. With over 10 years of experience in economic journalism, she specializes in global economic trends and US financial policies. She firmly believes that a better understanding of the economy is the key to a more informed future.