Retirement planning is decades of saving up enough money to have a financially stable retirement. How do you know if you are on the right track for your goals? It is tough to know how much money you will need saved up when you are 65 and about to retire when you are in your early 20s. The key to retirement saving is to start saving as soon as you can. Even if it is a small amount at first, interest compounding will work toward your benefit. Keep reading for more information on how much money you need in your 401(k) at every age. 

Ages 20 to 29

The average balance of the 401(k) of Americans ages 20 to 29 is $15,000. People in their early 20s are just now finishing up their education and finding full time employment. Many do not even consider saving for retirement due to their student loans with high interest rates. In this age range, it is important to look at your retirement benefits through your job and to begin contributing to retirement savings accounts. Be sure to take full advantage of employer matching when it comes to your retirement contributions. 

Ages 30 to 39 

The average 401(k) balance for Americans ages 30 to 39 is $50,800. In this age range, people are beginning to get higher level jobs with pay increases. They are also in a place to purchase a home, have kids, and increase their investment portfolio. At this point in their lives, they may have had several jobs with retirement benefits. In this case, they may have several 401(k) accounts in their name. People with multiple accounts might want to look into 401(k) rollover. 

Ages 40 to 49 

The average balance in a 40 to 49 year olds’ 401(k) is $120,800. By this point, there has been a major increase in the account balance, over double than the previous age range. A reason for this major increase is being in peak earning years. For women, the peak is around 39 years old. For men, the peak is around 48 years old. 

Ages 50 to 59 

The average 401(k) account balance for Americans ages 50 to 59 is $203,600. This is another major increase from the previous age range’s average balance. People who are 50 or older can contribute another $6,500 a year, for 2021, to their 401(k) accounts. It can be extremely helpful for people who feel like they are playing catch up to increase their retirement savings. 

Ages 60 to 69 

The average 401(k)  balance for 60 to 69 year olds is $229,100. At this point in age, you can begin to withdraw from your 401(k) accounts which is shown in the lack of increase from the previous age range. While the starting age for withdrawals is 59 and ½, many people do not retire until the age of 65. 

While these are just general guidelines, it is a good idea to talk with a financial professional about how much you should be putting away for retirement each year. It is never too late to get advice to set yourself up for financial freedom in your golden years! 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Investing involves risk including loss of principal.

Sources: 

https://www.nerdwallet.com/article/investing/the-average-401k-balance-by-age

https://www.cnbc.com/2021/02/24/how-much-americans-have-saved-in-their-401k-by-age.html 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Investing involves risk including loss of principal.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Total Clarity Wealth Management, Inc., a registered investment advisor and separate entity from LPL Financial.

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