How Much Should People Have Saved In Their 401Ks At Different Ages

Saving Jar Colleen Kong

Art by Colleen Kong at

The 401k is one of the most woefully light retirement instruments ever invented. The worst is the IRA which limits you to contributing only $5,500 only for individuals making under $60,000 a year and married couples making under $116,000 a year. Meanwhile, you have to make less than $114,000 a year as a single or $181,000 as a married couple for the privilege of contributing after tax dollars to a Roth IRA, which I do not recommend before maxing out your 401k.

Give me a pension that pays 70% of my last year’s salary for the rest of my life over a 401(k) any time! With the government only allowing individuals to contribute $17,500 a year in pre-tax income into their 401ks in 2014, once again, our politicians fail us with their regulations.

The average 401k balance as of January 2014 is around $99,000 thanks to an incredible 30% rise in the S&P 500 in 2013. Even so, $99,000 is incredibly low given the median age of an American is 36.5. As an educated reader who is logical and believes saving for retirement is a must, I’ve proposed a table that shows how much each person should have saved in their 401ks at age 25, 30, 35, 40, 45, 50, 55, 60, and 65.

We stop at 65 because you are allowed to start withdrawing penalty free from your 401k at age 59 1/2. Meanwhile, I pray to goodness you don’t have to work much past 65 because you’ve had 40 years to save and investment already!


The assumptions for the below chart are as follows:

* For the first full year out of school, you only contribute $8,000 to your 401k.

* After the first year, one maximizes their contribution every year to their 401k plan without failure. We already agree that $17,500 a year in contribution is much too little, therefore contributing less is illogical.

* Average starting working age is 22. But you can follow the number of years working as a different guideline if you graduate later or earlier.

* $17,500 is used as the conservative base case maximum contribution amount for one’s entire working life. Hopefully the government will increase the max contribution amount over time.

* No after tax income contribution, although more power to you if you have the disposable income to do so.

* The low end column assumes $17,500 X the number of years worked after contribution $8,000 the first year. There is no company match or growth.

* The higher end column will assume $17,500 X the number of years worked X a 5%-10% constant rate of return. There is no company match in the high end either.

* Excludes any company match or profit sharing completely. The idea is that by excluding company match and profit sharing, that will more or less make up for the years in which one loses money in the stock or bond market. Furthermore, each company’s 401(k) match program is different.

* The Lower and Higher Amounts encapsulate at least 60% of all 401k levels for those who contribute the maximum amounts.  There will be those with less, and those which much, MUCH greater balances thanks to higher returns.

* You are logical and not a knucklehead. Just by searching this topic, you are taking ownership of your retirement and are thinking ahead with an action plan.


401k Savings By Age

From the results, we can conclude that even after 43 years of consistent saving, you only have around $743,000 to $3,500,000 in your 401k. Let’s say you live for 20 years after retiring at 65, you only get to live on $37,150 – $175,000. If goodness forbid you live to age 95, then you can only live off of $24,766 – $116,600 a year!

We know from simple economics that thanks to inflation, a dollar today will not go as far as a dollar 40 years from now. Private school tuition will probably cost over $100,000 a year in 20 years, so who knows what medical, food, shelter and energy costs will cost then. One thing is for sure, prices will be much higher.

You should check out my article on “How To Better Manage Your 401K For Retirement Success” where I highlight three different scenarios you should run to see if you’ll make it. Fidelity came out on 2/14/2013 highlighting the average of their 12 million 401(k) plan participants is up 12% to $77,300. For workers 55 years of age or older, the average balance is $143,300. These are terrible numbers.


Contribute the maximum pre-tax income you can to your 401k for as long as you work. This is the absolute MINIMUM you can do to help ensure a comfortable retirement. After you have contributed a maximum to your 401k every year, contribute at least 20% of your after tax income after 401k contribution to your savings or retirement portfolio accounts. That way, you will have potentially DOUBLE the amount in total retirement saving if your household income is $100,000 or more.  If your household income is closer to $50,000, you should still see a nice 30% boost to your retirement savings if you consistently save 20% of your after tax income.

Treat your 401k just like Social Security and write it off completely from your mind. Do not expect either accounts to be there for you when you retire, just like how you should never expect the government to ever help you when you’re in need. Just imagine 30 years from now, the government deciding to raise penalty free 401k withdrawal to age 80 from 59.5? Unfortunately, you need the money at age 60, and because you withdraw, the government imposes a 30% penalty on top of the taxes you have to pay. Don’t think it can’t happen. Expect it to happen!

The only thing you can count on is after tax money you’ve invested or saved. This is why after maxing out your 401k, it’s good to open up an online savings account, which have higher interest rates on average than your traditional bricks and mortar bank due to lower overhead costs. Your goal should be to then build as many passive income streams as possible.

Consider raising your after-tax savings percent after 401k contribution to possibly 50%. It won’t be easy, but if you practice raising your savings rate by 1% a month until it hurts, you’ll find it easier than you think. The most straight forward method is to make your 401k maximum contribution automatic, and save every other paycheck for the rest of your working life. Once you maximize your 401k and save over 50% of your after-tax income for at least 10 years in a row, you will be financially free to do whatever you want!

Recommended Actions For Increasing Your Wealth

* Manage Your Finances In One Place: The best way to build wealth is to get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts on their Dashboard so you can see where you can optimize. Before Personal Capital, I had to log into eight different systems to track 28 different accounts (brokerage, multiple banks, 401K, etc) to track my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing, how my net worth is progressing, and where my spending is going.

One of their best free tools is the 401K Fee Analyzer which has helped me save over $1,700 in annual portfolio fees I had no idea I was paying. You just click on the Investment Tab and run your portfolio through their fee analyzer with one click of the button. Their Investment Checkup tool is also great because it graphically shows whether your investment portfolios are property allocated based on your risk profile. There is no better free online tool that has helped me stay on top of my finances more than Personal Capital. It only takes a minute to sign up.

* Check Your Credit Score: Everybody needs to check their credit score once every six months given the risk of identity theft and the fact that 30% of credit scores have errors. For over a year, I thought I had a 790ish credit score and was fine, until my mortgage refinance bank on day 80 of my refinance told me they could not go through due to a $8 late payment by my tenants from two years ago! My credit score was hit by 110 points to 680 and I could not get the lowest rate! I had to spend an extra 10 days fixing my score. Check your credit score for free at and protect yourself.

Photo: Occupy SF Tent, by Sam. Might be your home if you don’t max out your 401K and save more!

Post updated as of 12/2/2014. The maximum contribution rises to $18,000 in 2015 from $17,500 in 2014. 



Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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  1. Young and Ambitious says

    Hey Sam!

    I’m so glad I stumbled across your website. I’ve been trying to find financial advice online for a while. So I’m 22 and just graduated and am making $77,500 pre-tax with no financial debt.

    I’ve been really struggling with where to allocate my money. I’m saving roughly 40% of my income taxes. I was thinking that it would be better to put more money in my accessible American Funds portfolio and max out my Roth IRA before maxing my 401k.

    Here’s my thinking:
    By maxing my Roth IRA, I’ll be able to pull out the $10k when I decided to by a house. I’ll also be able to pull out of my AF portfolio and add that towards my down payment, therefore reducing my mortgage rates and such. If I were to put it in 401k, it will grow but will be unaccessible for 38 more years. I could instead be putting it into property which would grow faster than my 401k.

    I know you think max out by my second year but I guess I’m just not sure why you’d want to put that much into an inaccessible account?

    I’d really appreciate the guidance!

  2. Wallstreet26 says

    If you don’t know what you are doing. Juss put it in a standard index with low cost. Which is basically vanguard or fidelity. If I was uninformed and in your position, I’d juss put in a target date fund. I haven’t looked intently at robo advisors, but they look similarly cheap too with decent allocation for aggressive portfolios. And my advice to you is to screw bonds, don’t touch them until the 10 year treasuries touch 7 percent or you are in your 60s.
    You are prolly in the 28 percent tax bracket. So you should max out the 401k and trad Ira if tax deductible. Why is it a good idea? Because that is money you would have juss paid in taxes. Go aggressive too because market downturns are typically about what you would pay in taxes anyway.
    It’s not all inaccecissble either, you can borrow max of 50k in a balance of 100k in your 401k. Also you can access without penalty if you buying a first home, if you have future school expenses or medical need. Lastly real estate does not grow faster than the stock market. Maybe in the past 30 years but rates have been dropping which fueled housing prices and the beauty of housing is you borrow 4 times what you put down.
    Lastly Roth IRA is a good idea only if trad Ira is not tax deductible. Anyways good luck young cubby.

  3. nlf says

    Just graduated and started working (in finance). I’m 21 going on 22. Currently, I’m contributing 6% of my paycheck to the 401k–just enough to the get the max. employer match. 6% is a ways off from the max contribution, though. Should I be contributing more? I already have about 12k in savings and 10k in a brokerage account. I don’t have many expenses (still live at home with my parents) besides gas and other sundries (i.e. food, entertainment)–usually around 500-600 per month.

  4. Thomas47 says

    what a great start. Congratulations.
    If you have any debt, pay it off. Otherwise, yes – continue saving.
    When I was your age, I maxed out pretax savings and have been doing so ever since.

  5. Hao says

    Great article and wonderful discussion. Not sure if anyone asked – there’s a lot of comments to ready thru :)

    But we were wanting to retire early (before 60) and were wondering if it’s better to just max out our 401K contribution and pay the 10% early withdrawl feee (or whatever the fee is when we do return)


    putting less in the 401K and using that money to build a larger “non-retirement” account that won’t have the penalty but doesn’t have the tax deferment?

    I know tax bracket would factor into the equation – but our tax bracket doesn’t seem all that high when we use turbo tax and it says you’re paying X%

    • Wookie says

      A lot of folks don’t realize that there’s no “additional penalty” to withdrawals from a 401k at age 55 if you are ‘retired’ from that company. That’s a key difference between a 401k and an IRA.

      • Hao says

        Guess I should be more precise. I can’t tell exactly when but we were targeting more in the mid to late 40’s, so i’m guessing that’s early enough that there would still be a penalty.

        We have a large chunk in 401k’s etc but not much outside of retirement type accts that have early withdrawal penalties.

        So the question is whether it makes any sense to put a little less in the 401k and more in a regular Mutual Fund/Index type account so we have $ avail for when we retire early. Or because of the tax deferment (and faster growth) is it better to just pay the 10% penalty

        • Wookie says

          I don’t know which is smarter, but the wife and I ended up with different strategies. She never worked anywhere that allowed post-tax contributions to a 401k, so her excess funds went to brokerage.

          Since my 401k allows post tax contributions, I’ve been maxing that out (max the pre-tax, max the ‘over 50’+up, max the post-tax).

          I like that a lot of our wealth is in retirement accounts, it puts them out of reach of most ‘judgements’.

          We’ve used some of her brokerage funds on ‘lifestyle’ things, so the flexibility is nice.

  6. ThatGuy says

    So I am 30 years old just got out of the military and have nothing saved up due to some bad choices when I was younger. I racked up debt and am now paying the price. I now have a solid paying job that offers a 401k that matches 1/2 of my contributions the first year and then full contributions after 2 years. I would say I have about close to a 6 figure debt between a house, credit cards and just other things. I feel like I can make a 5-8% contribution for a while but is this worth doing or should I pay off my debt first?

  7. Andy says

    Hey Sam,

    I have been reading on your site for a few weeks now and I have learned so much. I am 20 years old make 35-40k a year right now. I opened a Roth because I make less than 60k. I will be eligible to contribute to a 401k soon but do you think it will be wise for me to contribute to both based on my income?

    • Wookie says

      If your 401K has any ‘company match’, capturing that is a big priority. My company matches 75% of the first 8% of contribution, so contributing at least 8% is a ‘no brainer’. It’s free money.

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