If you've been diligently saving for retirement via a 401(k) account, you might wonder how you're doing relative to your peers. You'll find average 401(k) balances below. The data comes from Vanguard, which is the administrator for millions of people's retirement accounts.
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|
Age |
Average 401(k) balance |
Median 401(k) balance |
|---|---|---|
|
Younger than 25 |
$7,351 |
$2,816 |
|
25-34 |
$37,557 |
$14,933 |
|
35-44 |
$91,281 |
$35,537 |
|
45-54 |
$168,646 |
$60,763 |
|
55-64 |
$244,750 |
$87,571 |
|
65+ |
$272,588 |
$88,488 |
|
Total average |
$134,128 |
$35,286 |
Data source: How America Saves 2024, Vanguard.
Be sure you understand the difference between average numbers and median numbers. The average balance, as you probably know, is what you get if you add up the values of all the accounts in each group and then divide the total by the number of accounts. The median, though, works differently. To get it, you'd want to rank all the accounts in each group by each one's value, and then you'd pick the middle, or median, value.
This simple example might make the difference clearer. Imagine a series of numbers: 2, 4, 4, 17, 3. Add them together and divide by five, and their average is 6. But arrange them in order -- 2, 3, 4, 4, 17 -- and the middle value is 4. The median in this case (and many others) can give you a more representative idea of a typical value in the group of numbers. Any outlier numbers can skew the average.
So perhaps focus on the median numbers above. In each age group, half the people have accounts worth more than the median, and half the accounts are worth less. The much higher average numbers suggest that a significant number of accounts have values much higher than typical account values, thus driving up the average.
Note that the numbers above, in either column, are not enough to provide a comfortable retirement. Many of these folks might want to tweak their retirement plans and work a few more years in order to save more.
