401(k) Balances By Generation: From Gen Z To Boomers

Fidelity recently came out with its average and median 401(k) balances by generation. They are as follows:

Gen Z: Average $7,100, Median $2,500

Millennials: Average $44,900, Median $15,500

Gen X: Average $145,500, Median $44,000

Boomers: Average $215,000, Median $61,200

401(k) balances by generation, Gen Z, Millennials, Gen X, Boomers

How does your 401(k) balance compare to the average and median balances for your generation?

Low Median 401(k) Balances Across Generations

What stands out most from the data is how low the 401(k) balances are for every generation. I hope your 401(k) balance is way higher than the figures above!

Please realize this data is only for Fidelity accounts and many workers have multiple 401(k) accounts or rollover IRAs due to job hopping. That said, Fidelity is one of the largest 401(k) providers in America.

If you are a Boomer, there's no way you can retire off a median 401(k) balance of only $61,200. Good thing Boomers have the largest percentage of people with valuable pensions. In addition, Boomers are still able to take full advantage of Social Security benefits. Boomers may also have more 401(k) accounts.

I'm most concerned about Millennials with only $15,500 and Gen Xers with only $44,000 in their 401(k)s. Only a small minority of people in these generations have lifetime pensions. In addition, at the current rate, only about 70% of Social Security benefits will be paid out when these two generations reach their full retirement age of 67.

Gen Z, at least, still has decades of work and savings to go.

We Should All End Up 401(k) Millionaires

Perhaps I'm more disappointed about the 401(k) balances by generation compared to the average person because I strongly believe the majority of Financial Samurai readers will become 401(k) millionaires.

Maxing out a 401(k) as soon as possible is a fundamental personal finance move. Once your income is above $80,000, there is little excuse not to max out your 401(k).

Although cash flow may feel tight initially, you'll learn to live within your means within a few months after contributing the maximum. Then it's just autopilot from there.

If you're curious about when you'll become a 401(k) millionaire, I put together this chart using $18,500 a year in average 401(k) contributions. In 2023, an employee can contribute a maximum of $22,500.

Using a reasonable 7% annual compound rate of return and annual contributions of $18,500, your 401(k) will grow to $1 million in about 22.5 years. If you start contributing $18,500 a year at age 26, you'll be a 401(k) millionaire at age 48.

401(k) millionaire

No Longer A 401(k) Millionaire

What's sad is that I used to be a 401(k) millionaire at the beginning of 2022. My 401(k) balance rose to about $1.1 million at its peak. Now it's at about $995,000 after being down to as low as ~$850,000 in October 2022.

Despite no longer being a 401(k) millionaire at 46 years old, I'm hopeful the balance will surpass seven figures again. All I've got to do is invest the whole portfolio in Treasuries yielding 5%+ for one year. Ah, the temptation to invest risk free!

Here's the thing. There have been zero contributions to my 401(k) since 2012 when I left my job. If there were, I would have contributed about $200,000 over 11 years, and my employer would likely have also contributed another $200,000. The $400,000 in contributions might have grown to $600,000, meaning my 401(k) balance would actually be closer to $1,595,000.

I also don't assume employer 401(k) matching or profit sharing in my 401(k) millionaire chart above either. Therefore, there's a high probability that you can become a 401(k) millionaire even sooner than my estimates.

Before you decide to retire early or leave your job for something new, please don't forget to calculate the retirement benefits you will be forgoing. Over time, it can add up to a significant amount.

Here's a post explaining why the median 401(k) balance is so low. In a nutshell, life gets in the way! If you want to build a comfortable amount of wealth for retirement, you must focus.

401(k) Balances Are Much Lower Than What's Needed For Retirement

As you can recall from the post, How Much People Want In Retirement, the amount of money survey participants thought they needed for retirement for all ages was $1.3 million. Meanwhile, the amount currently saved by all ages was $89.3K.

There's clearly a huge disconnect between what people want and what people will actually do to get what they want. Review the chart again below. It's a great cross reference, especially if you are skeptical about the low 401(k) balances across generations.

how much U.S. adults think they need to save for retirement compared to what they actually have

Based on the data above, the 401(k) is just not cutting it as a significant source of funds for retirement. The median 401(k) balance across all generations is only around $35,000, which is much lower than the median saved by all participants of the Northwestern Mutual online survey of $89,300.

The good news is that people are saving money outside of their 401(k). Money outside of tax-advantaged retirement accounts is the source of tappable passive investment income for early retirement or work flexibility. The other good news is that many employees have more than one 401(k) plan or have rollover IRAs, thereby increasing the likely overall 401(k) balances.

The bad news is that $89,300 is still way below what people think they need in retirement. Even if you 10Xed the median 401(k) balance across all generations to account for multiple 401(k) plans per person, you’d still only get $350,000. Yet, curiously enough, there is no ongoing retirement crisis.

The government has offered new retirement saving initiatives under the Secure Act 2.0. However, maybe the government doesn't need to do more if so many employees are already not taking full advantage. Here's the full Secure Act 2.0 document from the Senate if you're interest in all the details.

Stop Neglecting Your 401(k) Contributions

Even the average 401(k) balances by generation are not that impressive. Sure, having $145,500 in your 401(k) as a Gen Xer is better than nothing. But that money will disappear in five years if you spend just $30,000 of it a year.

If you find your 401(k) balance closer to the median or average balances for your age group, get fired up to start contributing more! Just think about your annual 401(k) contribution as a temporary pay cut that immediately shields your taxable income.

Age 59.5 will come sooner than you know it. When it does, you'll be happy you contributed as much as possible for decades.

If you can then build a nice taxable investment portfolio, a rental property portfolio, and a Roth IRA, you'll be golden when you no longer can or want to work.

Reader Questions And Suggestions

Why do you think the average and median 401(k) balances by generation are so low? Are people saving money for retirement elsewhere? Or are people simply not saving enough money for retirement? Could pensions, Social Security benefits, inheritances, and rollover IRAs be picking up the slack?

1) Diversify into real estate. If you want to have financial freedom sooner, then only investing in a 401(k) is not good enough since it can't be touched without penalty until age 59.5. You must also build an investment portfolio that generates useable income today.

Consider investing in private real estate through Fundrise. Fundrise manages over $3.3 billion invested mostly in Sunbelt residential and commercial real estate, where valuations are lower and yields are higher.

I've personally invested over $140,000 in Fundrise to diversify my investments and generate more passive income. You can get started with as little as $10.


2) Track your finances diligently. Sign up for Empower, the best free online financial tool to manage your 401(k). With Empower, you can x-ray your 401(k) portfolio for excessive fees, track your net worth, and better plan for your retirement.

I've been using Empower to track my net worth since 2012. The more you can stay on top of your finances, the better you can optimize your finances. Both Fundrise and Empower are affiliate partners.

3) Subscribe to Financial Samurai. Join 60,000+ others and sign up for the free Financial Samurai newsletter. You can also subscribe to my podcast on Apple or Spotify. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. I helped launch the modern-day FIRE movement.

About The Author

66 thoughts on “401(k) Balances By Generation: From Gen Z To Boomers”

  1. Seems to exclude the Greatest Generation. What about them? We’re still alive for the moment.

  2. Well you can invest and save all you want and die tomorrow never to enjoy it. Just do what makes you happy and enjoy life. So many people i know never reach retirement.

  3. pierre morris

    The 59.5 years of age is no longer valid. Now ypu can pull your 401k funds at age 55. The Rule of 55 makes this possible. There are other rules that allow as well. Strage, the author doesn’t mention this.

  4. My net-worth is $900k+ of which all retirement accounts add up to $350k+ which I think is decent for a mid-30s guy.

  5. I’m putting 10% in to my 401k. My employer adds another 6%. I’ve been doing that for about 6 years. I even had it higher than 10% for a little while. My 401k sits at around 140k after 15+ years of work.
    Do we realize just how bad the market tanked since Biden took office? I do some stocks, and many of them are still 60% – 80% down from 2 – 3 years ago.

    1. Thoughts about investing more and investing more into index funds / ETFs instead of individual stocks? It’s hard to outperform indices long-term.

      The S&P 500 is only about 6-7% below its all-time high. I wouldn’t blame a president for your stock portfolio performance.

  6. Hi Sam…just curious, you mentioned you haven’t contributed to your 401k since you left your banking job. Have you ever explored the self employed (solo) 401k with Fidelity. As you probably already know, it has great benefit and higher contribution rate.

  7. Why is the average return on cash in table 2 for the period 1938-2020 only 1% ? Seems low unless these numbers are inflation adjusted. In which case the equity and bond numbers would be lower too?

    1. Could be. But I remember the average cash interest rate at a bank being 1% per-pandemic for me. But the national average was much lower.

      What return were you getting for your before the pandemic?

  8. I have a 401k from Fidelity due to a new job I started last year, but this does not reflect my total 401k accumulated over 20 years of working full time which is dispersed across multiple administrators. Also 401k does not equal to net worth which includes roth IRAs, rollover IRA, personal savings, etc in addition to 401k. Would be interesting if anyone can get hold of net worth by generation

  9. Always enjoy your insights & especiallynthise who open up in the comments..
    Having lived through the 18% mtg rates & kept buying properties, I then experienced black Monday 1987. We never invested in equities again, but continued to build a portfolio of rental real estate. It helped having a great paying JOB, but admit RE on the side was a challenging, tough physical & financial draining beginning. I was told many times I would go bankrupt & never make money, but I retired after 17 years & never looked back (thanks to a great supporting to die for wife). We have been debt free since 1990 & everything we own is free & clear.
    We both opted for 401(k)-solos & invested in RE & high interest rate seller financed notes as we sold off various investment properties.
    We’re still buying, rehabbing then selling & holding notes @ 12%+. We continue to invest & finance fellow investor friends flips & it has paid off way beyond the 12%. The last flip netted 24.39% after 4 months & another will net 58% after 12months. We had not touched our ‘retirement’ income until the dreaded RMD clicked in.
    My wife trained & imbued RE in our college educated kids, who all graduated loan free & owned their own homes (plus RE investments) a couple of years after graduating.
    Admittedly we built, rehabbed their homes & hold all the financing at approved AFR’s.

  10. You don’t have kids do you? Because if you did you would know 80K a year is not enough to pay for school and max your 401k. Lmk if I am wrong.

    1. I stayed home with my three kids when they were young and early in our careers, the companies we worked for didn’t offer 401Ks, so we invested very little during those years. We’ve played catch up for the past 15 years with companies that provide pensions and 401Ks. Also, I work for a university that offers a tuition benefit for my family’s higher education, so that was a life saver.

  11. These reports bother me a bit because they do not consider that people can have multiple accounts as Sam mentions. I am included there having an old 401k with Fidelity and a separate 401k with a similar balance from my current employer. It skews the averages lower making them look worse. Keep saving!

  12. Simple Money Man

    People just don’t start early enough, may not be disciplined in it or any other variety of reasons….excuses.

    Since you have a relationship with Empower/Personal Capital, can you find out the average 401k/retirement balances and other after-tax investment account balances by age ranges there?

    It might be more helpful for us to compare with our peers (i.e., people that take personal finance more seriously.

  13. I took a look at my pitiful vanguard account, just hoping the sp500 doesn’t disappoint me in the next decade.

  14. I have to assume IRAs and Roths, as well as 457s, all count. Then yes, there is not much excuse for not being a 401k millionaire (or almost double that if the spouse also worked) by the age of 60 or so, even with some huge setbacks at certain points.

    That said, bear in mind that all the pre-tax retirement funds are subject to Federal and state income tax before you can lay hands on them. That means you probably don’t want to wait until RMDs (as late as age 75 for many of us) to start drawing on it all at once, or you could easily see yourself losing 30% (or more) of it to taxes if you are already in the 24% marginal tax rate (and this does not push you higher).

    Also, it may or may not be a good idea to move to an income-tax free state after retirement, or at least for the years in-between retirement and RMDs, to try to convert as much as possible into backdoor Roths before RMDs kick in, at which point there is no point (you can’t convert RMD money into your Roth). The problem being you can’t covert too much in one year or you could cross into the Federal bracket that is currently 32%, an 8% hike from the previous bracket.

    Even without crossing that line, 24% of the drawing being taxed away by the IRS, with potentially, say, 6% to 8% in state income tax (yours may be less, more, or none), and that million dollar 401k is really more of a 700k 401k.

    Also keep in mind that a substantial collection of 401k funds keeps growing, even after you are drawing from it, and could conceivably rise to having to take out as much as a million a year–if you are well invested and live into your nineties. Which sounds great, although don’t get too carried away; taxes and inflation will make that a lot less than it sounds like and, with that much income, your Medicare will have gotten really pricey, along with your age having made your medical expenses really pricey.

    On the other hand, you aren’t too likely to blow it all on mountain climbing, bungie jumping, and high speed race cars.

  15. I think the low 401k amounts are true. In the area where I live I notice it when I go into the stores to shop. Once when I went into my local Dollar General (I still like to shop frugally) the cashier was no less than 85 years. MINIMUM! I think she was closer to 92+. In my local Lowes, workers over the age of 65 is the norm. One cashier that checked me out was suffering from back pain so badly (at least 70 years old or older) that she was using a cane at the cash register.
    This is not a drill.

    1. I’ve seen 75+-year-olds at the grocery story who can barely stand, trying to bag groceries too. Although I admire their ability to work, it is also sad. Where are their kids to help them? We need to help our parents.

  16. My wife and I are both 36, live in SoCal and are DINKs. She has Aprox 330k in her 401k, maxes it out each year, and gets a 125% match up to 6% of her salary + bonus. Hard to pass up that free money!

    On my side, we had an overweight 401k at my job so I kept getting the $$ back annually. We started putting it in RE. I ended up taking the remaining money during Covid as a hardship payout and continued investing it in RE. We have 4 SFH in heartland America (had 6 at one point but flipped a couple) all financed on 30 year fixed between 3-4%. Aprox 600k in equity (our portion) between the 4 of them (2 we own 100%, 2 we own 50/50 with a partner). Our cash flow portion is almost 3k a month on them. (Almost covers our $3300 a month mortgage on our primary!)

    Our Primary is worth 2-2.1 which we owe 760k on, financed at 2.825% for 30. Realistically we do not need a bigger house even if we have children so happy to lock this up at this rate (bought in 2019 and refi’d since).

    We have a 200k-ish in cash, which we are loving the 5.5% 3/mo treasuries and keep accumulating. Right now we can save 8-12k a month after tax income, and although I’d love to start investing in an after tax portfolio- it’s hard to pass up the treasuries at 5.5%, no state income tax, and no risk.

    The million dollar question (no pun intended, well maybe :)), where do you put cash moving forward? I know we need some exposure to the market, and ultimately would have to retire early, though we have a long way to go for that. Creating cash flow and flexibility is our long term goal. Only debt is (1) car loan at 2.9%, which doesn’t make sense to pay off at this point. No student loan debt, and never had CC debt. Thank you in advance!

  17. I do not have a 401k account, and never have had one due to the simple fact that all of my positions were either contracted because finding a job from 2008-2013 was quite tough, and that many companies require you to be there for at least 2-3 years before you’re vested in a company sponsored 401k. I have a Roth Contributory Account but that’s all, I’ve also endured long-term illness and personal matters including a parent’s suicide that occurred during my last semester of college. Most of all, most Americans struggle to make ends meet and the median is a better measure than the average….I think more than anything else the median demonstrates the true struggle of most Americans and the incredible burdens they face to just pay for their needs let alone save for retirement. I need close to $30k worth of dental work, yet my insurance will cover a max of $1k.. . it’s pretty hard to work when you experience consistent dental pain due to pre-existing conditions that you had no say over. I understand the markets, I have a good degree in business, but like so many other people, I’ve experienced a series of setbacks that you’re completely blind to. So, instead of blaming people and chastising individuals for not saving enough, you must force yourself to look at the bigger picture as to what is going on in each person’s life. You’re privileged to write this and to have had the health and career you did have…but most people will never experience this, including myself.

  18. David J Fleming

    >>>1) Diversify into real estate. If you want to have financial freedom sooner, then only investing in a 401(k) is not good enough since it can’t be touched without penalty until 59.5. You must also build an investment portfolio that generates useable income today.<<<

    I totally agree about building an investment portfolio that generates useable income today. Income pays the bills.

    I've been retired for 17 years and have been investing in income CEFs (closed-end funds) for 22 years. After retiring, I converted my 401(k) to a traditional IRA. Using CEFs, I've had a steadily growing source of income since my retirement in 2007. Even during the recessions, my income was stable and my working capital increased. The whole strategy is outlined in a book coming out on Sept. 5. It's called Retirement Money Secrets and is authored by a retired, longtime investment manager.

    1. What positions do you hold? I also invest in CEF’s that are for sale with a discount to NAV. Also invest in reits, BDCs, and mlp’s. Of course also some regular index funds in the taxable and Roth. I’m a teacher with a pension and about 12 years away from retirement (40now). Trying to build up income producing assets so I don’t have to be the 70 year old teacher trying to relate to teenagers!

  19. I do feel like financial media has been beating this drum about lack of retirement savings since at least mid 2000s and maybe since turn of the century. But I really haven’t seen mass elderly homeless that you would have expected or at least mass movement of elderly to live with their children. Not seeing that either.

    Personally, my 401k represents only 10% of my net worth, so my account is contributing to a false narrative.

  20. To all that mentioned that the Fidelity survey is likely flawed due to people jumping from job to job and failing to consolidate their previous 401K/IRAs, you are very likely correct. However, as Sam mentioned, multiply the median x 10 and you are still left with a retirement savings deficit. Without making guarantees, I guarantee the vast majority of Americans are horrible savers and understand very little or nothing about personal finance. At work and in my social peer groups I am surrounded by many very highly educated and highly compensated individuals as well as blue collar workers, yet anytime I dare discuss personal finance issues/(early)retirement, they almost universally go cross-eyed, get lightheaded, and say to me, “what are you talking about, I don’t understand anything you are saying, I don’t like to think about that stuff,” or to the effect of, “well that’s what social security is for” or “my kids will support me if I need it.” I even have a close friend who is a managing director of global markets at BoA in Manhattan and she is making the mistake of having someone else manage all her accounts and gets hit with an AUM fee that will deplete her returns. Therefore, based on my unscientific anecdotal assessment, there is a retirement savings crisis in this country and we need to prioritize teaching basic financial skills to our young.

    1. CMAC,
      I have to agree with you about so many people being ignorant or scared to invest any funds for the future! In the 1970s, I remember t.v. commercials that encouraged the purchase of Savings Bonds.
      I truly believe that ALL of America’s youth should be encouraged to LIVE WITHIN YOUR MEANS & invest for their retirement years!!
      I noticed the trend of “young adults starting out in life expecting the very things it took their parents decades to achieve” happening in the mid 1990s. The past two generations need to wake up and get realistic about the “what happens if”!! MANY ARE A MEDICAL EVENT AWAY FROM HOMELESSNESS!

  21. I maxed out my 401k for years and I’m a 401k millionaire. Yay! But I’m cutting back on contributions this year. I’m not making much money and I want to live it up a little.
    My wife was a 401k millionaire. She should be back to that point in no time.
    Fidelity’s data is dismal. I think most people will just have to keep working when they get older. Gen X is in trouble, IMO.

  22. I have read the report, but it is still not clear to me about how they are calculating these figures.

    I have six 401k accounts at Fidelity, after a long career with many companies and a tendency to just leave my old 401k accounts alone without rolling them over. If one only looked at my average balance, it would be 6x smaller than the total. If one only looked at my median balance, it would be 12x smaller than the total.

    It would be more helpful if Fidelity would group account balance data by person, rather than assume each person has just one 401k account. If that’s too hard, then they could just filter out those “multi” accounts – like they do for Fidelity employee accounts. The methodology deserves a footnote explanation in their report.

    fyi: here is the link to the Fidelity Report:


  23. It seems to me that the single most valuable tool in the tool chest for most wage earners would be the Roth 401k. It has far higher contribution limits than an IRA or Roth IRA. The taxes paid prior to deposit of cash into a Roth 401k will, for most individuals, be at or under a marginal tax rate of 25%. It will take the Roth 401k about 3 years to earn what would have otherwise been deposited pre-tax, but from that point forward, principal AND interest/dividends/capital gains are all tax free. The longer the investment term, the more meaningful tax free becomes as the account balance grows. It’s unlikely that any of us will see more favorable tax rates than we have seen in recent years. Live long, avoid lifetime tax burden, pull the Roth trigger where-ever you can!!!

  24. I don’t know if the average 401K balances do much good to tell us the status of each generation retiring. In a world where people don’t stay at jobs very long, the average 401K balance doesn’t tell you much. When I changed jobs I took my 401K balances with me and transferred them to my brokerage account into a rollover IRA. My wife has also transferred her 401K a total of five times. It would make more sense to see what the combined 401K and IRA average balances are

    1. I think every datapoint, especially from a Fidelity or Vanguard offers a good glimpse of the retirement state of America.

      You can use this data to compare your 401(k) balance, or your largest 401(k) balance if you have multiple, with the data if you so choose. You can also multiply the figures by the average number of jobs one has in their careers, etc.

      What I think was clear is add this data under sells the total retirement balances by generation in America.

      Then, again, when you cross reference this data with the Northwestern, mutual survey data I have in this post, the median numbers aren’t too far off.

  25. While this is an important topic, as others have noted, 401k balances are an extremely misleading indicator of the health and size of one’s retirement assets. The range of investment options in a typical 401k plan is pretty limited compared to the options available to those in an IRA. This creates a huge incentive for people who leave jobs to roll their 401k balances into an IRA rather than to leave them in their former employer’s 401k or to move them to their new company’s 401k.

    With the average American changing jobs nearly every 4 years (https://peoplepath.com/blog/employment-trends-by-generation-how-often-do-people-change-jobs/), 401k balances don’t have very long to grow before they are (often) rolled over into an IRA.

    In my case, a look at my paltry 401k balance would create a very inaccurate view of my savings. Although I have been in my current job for 10 years, I have been limited to only a single year’s contributions due to an arcane IRS rule prohibiting 401k contributions for so called “highly compensated” employees (a term that is defined not by a universal figure constituting “high compensation” but a company by company calculation, which in my company means anyone earning over $140k per year). That rule meant that I was able to contribute in my first year in the job, and never again. That first and only year of contributions has now grown to about $40k, but that’s the extent of it. In fact, all my prior years of employment involved 401k contributions that have been rolled over to IRAs.

    Additionally, in many cases, those rendered ineligible to contribute to a 401k plan because they qualify as “highly compensated employees” often have an alternative option: contributing to a non-qualified deferred compensation plan. All of those contributions, like those in IRAs, are left out of the 401k balance assessments.

    None of this is to say that we don’t have a retirement savings crisis in America. We do. But the picture may not be quite as bleak as studies like this one suggests.

  26. Love all your great articles. I always tried to put as much in my IRA but started in the 70s max was $2,500 for years. It gradually grew and I had a job I loved and gradually tapered to two days a week and retired at 75 and now am 80. I have done just what you said and what Bill Bernstein said when you have won the game quit playing. Sold everything and sitting 100% in treasures. Like Will Rodger said when asked by a reporter Mr Rodgers where do you invest your money? I invest in Government Bonds the reporter replied you can’t make money in bonds and he said you can if you have enough of them.

    Keep up your good work.


  27. Hate to disagree with the data but I find this information really hard to believe. I haven’t looked much into it but is this only at Fidelity? What about Vanguard? What about T.Rowe Price? It’s also possible that people may have moved their job around a lot leaving their 401k balance stagnant at Fidelity leading to lower balance?

  28. I think that most Boomer adults who are from lower incomes think that they will use Medicaid and their children to pay for their old-age care/homes. I think they also plan on working until they physically cannot. Gen-X and Millennials from lower-income brackets also likely will follow that same pattern, but perhaps be surprised by how little they’ll get from SS and be surprised by how much they have to empty their entire savings before being able to use Medicaid. I think a retirement crisis certainly could be coming, as Millennials are not having many kids. But, one option to take off the pressure is for the USA to offer work visas to immigrants who are qualified to work in the healthcare sector.

    1. You would think the average balance for Millennials would be much higher since many aren’t having kids. If they would just contribute the average cost of kids (roughly $15k/year per kid) then they would have plenty of money when they are ready to retire.

  29. I think Fidelity does say that’s per account. Many people switch jobs and have multiple retirement accounts.

  30. Great insights. Those medians are pretty low given how much cost of living and healthcare has risen. Neither of my parents would be surviving if they didn’t have social security. They’re fortunate to live in reasonable to low cost of living areas and to be able to collect benefits.

    I’m not counting on social security. If I do get it, great! I’ll treat it as a bonus. I’m doing my best to stay healthy, be consistent with saving and investing, and stay independent. I’ve seen too many things go wrong with the government, especially local government, to risk putting my financial future in its hands.

  31. For those young folks who are gen x and beyond, it is very important to discount the idea of getting any social security. It is a collapsing concept that the boomers will likely suck dry by the time you will retire in 20-40 years. It cannot be included in your retirement calculations.

    Focusing on your 401k and Roth IRA, preferably maxing both, cannot be overstated as one of the most important financial things you can do, especially when you are in your earlier years. While the concept of retirement is rapidly changing in front of us, you can’t go wrong with maximizing your tax advantaged savings.

  32. Just watch out for the fees. I have had my 401k through Fidelity and returns over the past 20 years very mediocre. I did alot of specialty funds to try to outperform and the both underperformed and hit you with high management fees. IF your young just dump it into a low-cost total stock market fund and don’t think about it.

  33. Sam: thanks for this, 110% agree on your
    low savings assessment.

    I do wonder if the Boomers have considered home equity and taxable savings. While correct that some may have DB benefits, most will not (guessing on this).

    Net worth by generation also suggests low degree of savings. Home equity included?

    It is my understanding that most young people are aggressive savers, held back only by student loans.

    Love your work and perspective!

  34. One of the luckiest things to happen to me is getting my first job 30 years ago in a Retirement Services department. I had half a dozen elders (my age now) advising me to save the max every year. Even back then when my salary was under $30k I saved close to or all of the max.
    As Sam points out, you get used to the adjusted salary almost immediately and won’t miss it. It has the dual benefit of learning to live well below your means. If I needed to, I could get a job at a much lower salary, stop contributing at that time and not reduce my take home pay at all

    As you can probably tell, I am now the “elder” encouraging all the younger workers to start immediately and save for the long-term.

  35. I started my 401k in 1996, ending in 2022. it took 24 years to hit $1million (2019). I was 100% stock in my first 5 years, 90/10 the next 10 and about 80/20 the final 10 years. I maxed out contributions every year 1999-2022. One thing Im guessing had an impact is the lower max contribution limits in my earlier years (about 1/2 what it is now), higher fund fees vs what they are today, and the shift towards bonds in final 10 years where my balances where higher, probably slowed things down. I have my annual returns as reported by Fidelity going back to 2002. It’s the year end annual report from each final Dec 31 statement so I think it’s a weighted return. I just did simple math of combining and came up with an average of 8.34% across the 21 years where I have return data. 2002-2022.
    While Im not thrilled with the returns they are good enough for me, especially given everything that happened in those 24 years. My only regret is messing with my allocation too much and buying expensive funds in my early years.

  36. According to some research by Transamerica Center for Retirement Studies, 49% of baby boomers are working past age 70 or do not plan to retire. The reasons for this are almost as likely to be financial-related (82%) as health-related (78%).
    This matches your numbers – if you have no real money in your 401k you keep working. I am sure if you corrected for this subpopulation, your median and average 401k balances for boomers would skyrocket. Right? Based on conversations with colleagues in ther 50s and 60s, I hear a similar thing. One of my fellow teachers has been working at my school for 20 years, is in their mid 50s and intends to go on working for another 20 years plus. They have no retirement savings.

  37. One thing I wonder is if the low balance reflects people who have switched jobs and whose new employer doesn’t have a 401k, or if the old one didn’t have a 401k and the new one does, so they haven’t had as many years to be able to pay into the system. I’ve never worked at an employer that offered a 401k. My early jobs had no employer-sponsored retirement plan at all, and my current law firm (small firm, I’m a partner) offers a SIMPLE IRA, but not a 401k. I do have a solo 401k that I set up to invest my side job money, but that’s just side job money, and I haven’t contributed every year to that (although I’ve always contributed to an IRA/backdoor Roth, or used funds to invest in real estate or other things).

    So, at age 44, my 401k balance is a pitiful $83,570. If I were relying on that alone for retirement, I’d be hosed. But my Roth is $200k, my individual brokerage is around $200k, my HSA is around $50k, and I’ve got a meaningful amount of real estate investments. So just looking at the 401k balance isn’t a full snapshot of what’s going on.

    It would be nice if there was some sort of survey that could track across all types of investments to see how the average bear is doing. But I think that’s impossible, unless it was a voluntary survey, and then it would probably skew toward the higher net-worth people who would think answering that was fun, versus the non-savers who wouldn’t have anything to report and who would think answering that would be admitting defeat.

  38. Curious as to
    Why as a self employed person you don’t have a solo Roth 401k for you and your wife? This way you could max 22,500 apiece (if she is on the pay roll) and then add a non deductible 401k and do a mega backdoor Roth.
    Also according to what I read the new secure 2.0 was supposed to allow bigger catch-ups but the way it’s worded it actually takes away ALL catch-ups for those older than 50.

    1. Astute question. I do have a Solo 401(k) I opened up in 2013 to capture some freelance income. And I do have a SEP IRA.

      So technically, my tax-advantaged accounts total is larger than what I stated. And this is probably true for many, which is why the Fidelity numbers are likely understated.

  39. I often wonder if these are incomplete pictures. Most people change jobs quite a bit these days. At 50 I’m about average for my 401k balance, but I’ve only been working this job for about 7 years. Most of my money is in IRAs, I rollover all my 401ks from previous jobs to IRAs. Also my son at 22 is between median and average for his 401k, but he has about 10x that in his Roth IRA. So if you judged us by our 401k balance alone we’d be average at best. But in reality that is a VERY inaccurate picture. I only hope that is true for many others.

  40. Is the Fidelity study only looking at 401k balances held with Fidelity? Many of us work for multiple different employers over the course of a career and opt out out of rolling the balance from previous jobs into our new employer’s 401k. My current 401k isn’t an adequate snapshot of my retirement savings, and I suspect this is the case for others as well.

    1. I don’t think the findings are very far off.

      Half of the population pays zero federal income tax, therefore they would be unable to accumulate any excess cash flow for investment purposes.

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