Average 401k balances by age

[mentos]

Average 401(k) balance: Strategies for every age

Average 401(k) balance by age and how to fully leverage employer contributions. Learn about vesting and see how your retirement savings compares to others.

www.businessinsider.com

These seem very low. How does the average person retire?

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[owlegrad]

Family support or by becoming burdens of the state, presumably.

 

[Hels2007]

It's been out there that most people don't have much in terms of savings. Those who don't probably a) don't retire and keep working, b) live on social security and what they do have and then go on public assistance, c) rely on family, d) lead pretty shabby life - mostly some combination of two or more of these.

 

[wagrxm2000]

As much as I hate being taxed. This is exactly why we have social security.

People have no clue how to save.

 

[quickpic007]

Average 401(k) balance: Strategies for every age

Average 401(k) balance by age and how to fully leverage employer contributions. Learn about vesting and see how your retirement savings compares to others.

www.businessinsider.com

These seem very low. How does the average person retire?

This doesn't tell the whole tale. Many people have $ outside 401. I have good size net worth but my 401k is not even 200k.
Lots of richer people have money in businesses, real estate and taxable accounts i think

 

[wagrxm2000]

What’s your net worth, and how do you compare to others?

The naked financial truth comes down to just one number. Is yours higher than the median?

www.marketwatch.com

.

I don't believe the 2019 results have not been published yet but this is a better representation. Still not good.

 

[mentos]

This doesn't tell the whole tale. Many people have $ outside 401. I have good size net worth but my 401k is not even 200k.
Lots of richer people have money in businesses, real estate and taxable accounts i think

I doubt the average American has much money outside of 401k like you.

 

[WVUPharm2007]

My NW is approaching $500k. I thought I was #poor. Guess I'm not doing that bad.

 

[TheBlaah]

I've always wondered if many people include their spouses and the investment into their own houses when calculating NW. My finances practically inextractable from my wife's, so I have to include hers into my own.

Edit: Just looked at the site. Looks like you're supposed to calculate household income and, for the most part, include equity.

 

[Amicable Angora]

Remember the figure that more accurately reflects the average person is the median column, so the amount they have is even less.

So small surprise 50 years down the line they’re shouting and screaming in the pharmacy about why their medications “cost so much,” while they’re only asked to pay $11 while milking the system and getting 30+ meds.

 

[JustFillIt]

The truth is - the average person anymore really does not contribute to savings at all. The way the economy is set up these days, it has become very hard to save. A lot of companies do not even offer 401k match anymore

 

[wagrxm2000]

The truth is - the average person anymore really does not contribute to savings at all. The way the economy is set up these days, it has become very hard to save. A lot of companies do not even offer 401k match anymore

It isn't the economies fault.

 

[Hels2007]

It isn't the economies fault.

There was a time when a large number of people knew how to live on a budget and saved even when they made little. People today don't want to live according to the income they make and overborrow in order to overspend... Because they would rather have the latest iPhone today than money in the bank for later.

 

[JustFillIt]

It isn't the economies fault.

Yea I have mixed feelings about that. I am as much of a capitalist as anybody here - however I just feel like the way things are now it has become very hard to save.

Comparing the economy of the 90s (and the opportunities that were available for the next 30 years for a worker entering the workforce at the time) with the way things are now is laughable.

Clearly it was easier to save in the 90s than it is now.

 

[Hels2007]

Hmmm... Bloomberg just posted an article about 401k not being the best savings instrument anymore. I don't have the background to tell what's best or not, but I doubt that the majority of people with low 401ks have all their assets elsewhere.

401(k) Plans No Longer Make Much Sense for Savers

The inherent extra return participants enjoyed for many years has almost disappeared because of changes in tax laws and high fees.

www.bloomberg.com

 

[quickpic007]

I doubt the average American has much money outside of 401k like you.

? All my pals have taxable vanguard or fidelity. Parents and the sort too.

It isn't the economies fault.

#OKboomer

 

[mentos]

? All my pals have taxable vanguard or fidelity. Parents and the sort too.

Do you know what average means?

 

[Argentium]

Most Americans' wealth is tied up in their houses.

And as others have said, it doesn't take into account other savings vehicles of which Roth IRA, IRA, HSA, all of which are better than 401k's for some segment of the population. Also many of the older retirees do still have pensions

The younger ones .. yah it is bad. Gen X really got the short end of the stick with the dot com bust, financial crisis, and pandemic all decimating returns over a 20 year period.

 

[mentos]

Most Americans' wealth is tied up in their houses.

And as others have said, it doesn't take into account other savings vehicles of which Roth IRA, IRA, HSA, all of which are better than 401k's for some segment of the population. Also many of the older retirees do still have pensions

The younger ones .. yah it is bad. Gen X really got the short end of the stick with the dot com bust, financial crisis, and pandemic all decimating returns over a 20 year period.

Disagree with most of that. Millennials went through all of that too, but we didn't get to buy new construction homes (now worth millions) in desirable areas for $200k like you guys did. College was significantly more expensive for millennials. Millennials have to compete in bidding wars to get a 60 year old house for 600k-750k.

Did the pandemic decimate returns? Most people are up for the year by now.

Gen Z will have it worse than all of us. It's just a result of overpopulation.

 

[Argentium]

Disagree with most of that. Millennials went through all of that too, but we didn't get to buy new construction homes (now worth millions) in desirable areas for $200k like you guys did. College was significantly more expensive for millennials. Millennials have to compete in bidding wars to get a 60 year old house for 600k-750k.

Did the pandemic decimate returns? Most people are up for the year by now.

Gen Z will have it worse than all of us. It's just a result of overpopulation.

Depends on your definition of Gen X and Millennials but the obvious difference being ... yes, Millennials went through all that, but by definition they have 20 more years in the market than someone in Gen X. Sequence of returns matters a lot in sustainable portfolio withdraw. Also no where did I say that millennials don't also have it bad .. you inferred that on your own

FYI - I am a millennial and was able to avoid the worst of the financial crisis. Graduating into that or hitting the peak of your career during something like that is something that is almost impossible to recover from. Multiple studies have shown that students graduating into a recession never recover and have lower lifetime earnings

 

[quickpic007]

Do you know what average means?

Yes? No way most do not have any savings, not that hard to save money in the last decade

 

[owlegrad]

It isn't the economies fault.

I mean people used to get pensions so...maybe a little bit it is?

 

[JustFillIt]

I mean people used to get pensions so...maybe a little bit it is?

It’s a symptom of a poor economy. In my opinion it’s a symptom of the rich getting richer and the poor getting poorer. The middle class is loosing heavily over the past 15 years.

We are also loosing 401k matches in many corporations now.

 

[owlegrad]

It’s a symptom of a poor economy. In my opinion it’s a symptom of the rich getting richer and the poor getting poorer. The middle class is loosing heavily over the past 15 years.

We are also loosing 401k matches in many corporations now.

I mean my company literally just stopped doing 401k match like last month (supposedly temporarily but no news on when it will resume) so yeah I get it.

 

[wagrxm2000]

The average rate of return since 1958 is around 8%.

Save 100 a month for 40 years: $350k
200 a month: $700k

The middle class median income in 1980 was $61k. If you want to argue about the lower class that's fine but there's no reason the middle class should be suffering.

A married couple at age 65 after working 40 years should be about to retire comfortably.

It's not the economy for the median middle class family. It's poor savings habits.

 

[mentos]

Yes? No way most do not have any savings, not that hard to save money in the last decade

I think you need to get out of your bubble. Most Americans have less than $1000 saved. Far less have investments in a taxable brokerage in addition to their retirement accounts.

 

[mentos]

Depends on your definition of Gen X and Millennials but the obvious difference being ... yes, Millennials went through all that, but by definition they have 20 more years in the market than someone in Gen X.

Are you confusing millennials with Gen X?

Gen X: born between 1965 to 1980
Millenial: born between 1981 to 1996

Gen X has been in the market 20 more years than millennials. They are the ones who bought MSFT, APPL, AMZN and desirable properties for dirt cheap while millenials were poor students.

My Uncle bought a house in Socal for 300k in the 90s and it's worth 1.7mil today. He still has Honeywell stock from his first job in the 80s. He went to an ivy league grad school for free - scholarships were much less competitive back then. And he had practically no undergrad debt. It's laughable that millenials have it better than Gen X.

 

[IndyPrePharm]

Average 401(k) balance: Strategies for every age

Average 401(k) balance by age and how to fully leverage employer contributions. Learn about vesting and see how your retirement savings compares to others.

www.businessinsider.com

These seem very low. How does the average person retire?

~5 years ago, my dad and stepmom (in their low 50's at that time) hadn't saved much for retirement so they both took the penalty and wiped their 401ks and bought rentals with the cash (up to 6 units now currently) and have gradually paid them down. By retirement age, they're hoping to have acquired and paid off 10 total units and the steady income flow would be equivalent to a 4% withdrawal rate on a $4 million 401K policy (~$150K income from the 10 units), but with the added benefit of write offs to better protect the income stream than you could from withdrawing from a 401K + rents always increase + property values always increase. Thought he was looney at the time for wiping his retirement, but turning out to be a pretty smart move for them I think that will lend them more income stream than their smaller 401s would ever have. But, who's to say...this is my long-winded way of just saying that some dummies who didn't save enough for retirement & are getting older may actually be cashing out their 401Ks and using the money for other investment purposes & trying to get creative? My dad would fall in the 57 year old age range in the article and he would be a contributor to dragging that average savings rate down pretty solidly with his current $0 401K balance. Doesn't mean he doesn't have a retirement income stream planned though. I'll take any critiques to that plan he's got going though because I'm looking to create something similar over the years for myself as well, but while also still contributing to 401 along the way with intent of having both income streams in retirement.

 

[radio frequency]

I love this article. For once I feel above average about my savings rate!

 

[PharmDminus]

~5 years ago, my dad and stepmom (in their low 50's at that time) hadn't saved much for retirement so they both took the penalty and wiped their 401ks and bought rentals with the cash (up to 6 units now currently) and have gradually paid them down. By retirement age, they're hoping to have acquired and paid off 10 total units and the steady income flow would be equivalent to a 4% withdrawal rate on a $4 million 401K policy (~$150K income from the 10 units), but with the added benefit of write offs to better protect the income stream than you could from withdrawing from a 401K + rents always increase + property values always increase. Thought he was looney at the time for wiping his retirement, but turning out to be a pretty smart move for them I think that will lend them more income stream than their smaller 401s would ever have. But, who's to say...this is my long-winded way of just saying that some dummies who didn't save enough for retirement & are getting older may actually be cashing out their 401Ks and using the money for other investment purposes & trying to get creative? My dad would fall in the 57 year old age range in the article and he would be a contributor to dragging that average savings rate down pretty solidly with his current $0 401K balance. Doesn't mean he doesn't have a retirement income stream planned though. I'll take any critiques to that plan he's got going though because I'm looking to create something similar over the years for myself as well, but while also still contributing to 401 along the way with intent of having both income streams in retirement.

that was quite the gamble but it worked out well. current housing prices are much less favorable than 5 years ago. The home shortage began 2-3 years ago and it has been a sellers market ever since. Housing drops are few and far between, but if you are patient and wait til there is blood on the streets that is the time to buy. I know several who did this in ‘08/‘09 and have done quite well

 

[mentos]

that was quite the gamble but it worked out well. current housing prices are much less favorable than 5 years ago. The home shortage began 2-3 years ago and it has been a sellers market ever since. Housing drops are few and far between, but if you are patient and wait til there is blood on the streets that is the time to buy. I know several who did this in ‘08/‘09 and have done quite well

There's no indication that we will see a housing crash like that anytime soon. Back then people who had no business owning homes were given predatory loans. Today people are buying homes at these high prices with cash. Lots of rich international investors are buying up the inventory.

 

[WVUPharm2007]

I love this article. For once I feel above average about my savings rate!

Keep in mind that only those that have impressive savings will post about it. Or some may be fibbing about it a tad like I suspect.

The pharmacists that drive $80,000 cars and live paycheck to paycheck aren't even opening up the financial threads as their heads are firmly in the sand.

 

[RogerWilco]

Keep in mind that only those that have impressive savings will post about it. Or some may be fibbing about it a tad like I suspect.

The pharmacists that drive $80,000 cars and live paycheck to paycheck aren't even opening up the financial threads as their heads are firmly in the sand.

Its unfortunate that there is not a class in pharmacy coursework (that I am aware of) that discusses opportunities for saving in a 401K, IRA, taxed advantaged or taxable accounts - simply trying to max out 401K & IRA with low cost funds.....nothing "sexy" or complex.....just some of the basics and the pros/cons of doing so year after year (living below one's means).

 

[mentos]

Its unfortunate that there is not a class in pharmacy coursework (that I am aware of) that discusses opportunities for saving in a 401K, IRA, taxed advantaged or taxable accounts - simply trying to max out 401K & IRA with low cost funds.....nothing "sexy" or complex.....just some of the basics and the pros/cons of doing so year after year (living below one's means).

All it takes is a Google search, picking up a book at the library, reading BMB's guide to building wealth, the Bogleheads book that was posted here for free etc.

I have classmates who graduated 6 years ago who have never invested a dime outside of 401k match. They blew it all on new luxury SUVs, the latest Apple devices and travel. When I mention a travel credit card, it's like speaking a foreign language to them.

 

[WVUPharm2007]

All it takes is a Google search, picking up a book at the library, reading BMB's guide to building wealth, the Bogleheads book that was posted here for free etc.

I have classmates who graduated 6 years ago who have never invested a dime outside of 401k match. They blew it all on new luxury SUVs, the latest Apple devices and travel. When I mention a travel credit card, it's like speaking a foreign language to them.

Yeah, there was a pharmacist I used to work with that was like that. Had a Mercedes S Class, a huge house with like 4 garage stalls he'd show me pictures of. Always going on crazy vacations. When CVS transitioned to Vanguard, I mentioned it to him and told him he might want to go in and make sure his funds are invested right. Dude had no idea wtf I was talking about. Turned out he didn't even put money in to get the match. I honestly couldn't believe it. There are a lot of financially stupid pharmacists.

 

[WVUPharm2007]

They might know but just don’t care to save. 78% of workers live paycheck by paycheck.

A lot of people make low wages and honestly just have to live that way. In those cases, I get it. In fact, I've lived it most of my life.

There's no excuse for a pharmacist. I've lost my job twice, spent a year on unemployment, have a spouse that acquired a disability that maxed out my healthcare oop max limit last year...and she currently can't work because of it. And yet I'm still rocking a retirement account in the upper $200s.

Imagine where I'd be with an uninterrupted work history and a spouse chipping in another income.

 

[Swishers]

I've gotten ****ed several years in a row by the contribution limits for "highly compensated employees" rule. My company's 401k plan had to pay me back over $12,000 total so I can stay within the limit. Has anybody else here had to deal with this?

 

[pezdispenser]

I've gotten ****ed several years in a row by the contribution limits for "highly compensated employees" rule. My company's 401k plan had to pay me back over $12,000 total so I can stay within the limit. Has anybody else here had to deal with this?

There are complicated IRS rules that say in a 401k plan, HCEs cannot contribute more than non-HCEs. To avoid this, your company could change the plan to comply with the safe harbor 401k plan rules. Safe harbor plans usually only match 4% but it has to be 100% vested immediately.

 

[WVUPharm2007]

Sorry to hear about your wife. How is she doing?

Actually, a lot better! She's recently started getting botox in the trigeminal neuralgia area. She was able to drink a cold soda for the first time in a very long time because it deadened the nerve pain enough. Pretty promising so far!