The Average 401k Balance And Why It’s Too Low

Beef Wellington Medium Rare 401K

According to Fidelity, one of the largest 401k providers in the world with over 12 million accounts, the average 401k balance is now around $120,000 as of 2Q2021.

Among employees participating in a 401k for at least 10 years, the average balance hit $251,600, up 12% from a year ago. Separately, Vanguard reported that the average 401k balance has now shot up to $120,650. For workers 55 years of age or older, the average balance is $163,300.

In 13 not so short years, we've finally breached the peak average balance of $69,000 in 2007 and are now at record highs. It's not so hard to believe since the Dow Jones and S&P 500 are also at record highs. At the depths of the crisis in 2008, the average 401k balance plummeted 25% to around $50,000.

401k Participation Rate Is High

401k participation levels hover at a respectable 71% for those making $40,000-$60,000 a year. Participating levels are therefore clearly much higher for those making more, but the exact number is unclear. For those making $20,000 to $40,000 a year, the participation level drops to just 53%, which is understandable.

Let's say the average age surveyed is between 30-35, you can now see how absolutely pathetic these balances are if you are actually depending on your 401K to retire. 

You need to have the mindset of always maxing out your 401k every single year while saving at least 20% of your income after full contribution. There really is no other guaranteed way to retire comfortably if you aren't saving a good amount. The power is all in your hands!

Saving Your 401k Is A Must For Retirement

It may seem daunting to save $19,500 (2021 max) pre-tax dollars a year if you're not making more than $60,000 a year. But trust me when I tell you it's a must. If you spread out your contributions evenly over 12 months, you will be contributing $$1,625 each month pre-tax.

Hence, what's really coming out of your paycheck is not $1,625 each month, it's more like $550 every two weeks or $1,100 every month thanks to not having to pay taxes. You can do it. Millions of people survive on much less.

I recommend not stopping at the company's 401k match, which often equals 3% of your base salary or $3,000, whichever is larger. I've heard many examples of a much higher contribution, all the way to a full 100% contribution match as well. Whatever the case may be, you need to do your best to max it out.

After 10 years, you'll have at least $195,000 given it is very rare that one loses money in a balanced equities and bond portfolio in any 10 year stretch. Furthermore, I haven't included any of the company matching or profit-sharing.

Doesn't at least $195,000 in your 401(k) sound good when you are 32 (assuming you graduated at 22), and $350,000 sound good at 42? The fact of the matter is, you're more likely to have $200,000+ and $500,000+ if you keep maxing out your 401k based on average 4% returns, company matching, and profit sharing.

By 50 an 60 years old when you retire, you are well on your way to a million dollar 401k balance or more. However, the sad thing is that $1,000,000 in today's dollars certainly buys much less than $1,000,000 dollars 10, 20, and 30 years in the future. Hence, your 401k cannot be depended on. It can only be considered a supplement during your retirement.

Here's is my recommended 401(k) savings chart by age or work experience:

401k savings targets by age - The Average 401k Balance And Why It's Too Low

When The 401k Gets Big, It Starts Working For You

Once you have a sizable portfolio, your contributions will start making less of a difference. For example, a reasonable 4% return on a $500,000 portfolio is $20,000. If you made 20%, that's a nice $100,000 return while you kicked back doing little.

It's all about building your nut as large as possible so that your money just starts doing all the work for you. Some of you gunslingers might laugh at a 4% return, but when you have millions of dollars in the bank or in your portfolio yielding a risk free 4%, it adds up!

You become more risk adverse as you get older. It's partly because you might have more liabilities and dependents and don't want to blow yourself up. But, it's also because once you have a $500,000 portfolio, it will STILL make you sick to your stomach if you lose 10% of it. This is even though you are much wealthier than when you were first starting out  Some say 10% is 10%, but trust me, when I saw my portfolios go down by $100,000+ during the downturn, it wasn't a pleasant feeling.

Here is the reality of how much people have in their 401ks today:

Average 401k Amounts By Age 2014

Manage Your 401k Portfolio Wisely

At some point in 2010, I noticed that finally, I had breached my 2007 highs. I haven't bothered to calculate my portfolio's real rate of return given that it is quite messy with the company match and profit sharing plan. All I really care about is how much is in the darn portfolio, and I'm pleased to say it is about 25% above its previous peak. Here's how often you should re-balance your 401k.

There's no magic involved in the portfolio at all. The most important thing is an asset allocation between equities, bonds, and cash which you are comfortable with, and that you keep on maxing it out! I like the idea of keeping roughly your age as a percentage in bonds, and the rest in equities.

Couple your 401(k) with your hefty after-tax investment account, you will be good to go when it comes time to no longer work.

Recommendation To Build Wealth

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The best tool is their 401k Fee Analyzer which runs your investment portfolio through its software to see what you are paying. I found out I was paying $1,700 a year in portfolio fees I had no idea I was paying! They also recently launched the best Retirement Planning Calculator around, using your real data to run thousands of algorithms to see what your probability is for retirement success. 

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About the Author:

Sam began investing his own money ever since he opened an online brokerage account online in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at Goldman Sachs and Credit Suisse Group. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. He also became Series 7 and Series 63 registered.

In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $200,000 a year in passive income largely thanks to investments in real estate crowdfunding. He spends time playing tennis, hanging out with family, consulting for leading fintech companies, and writing online to help others achieve financial freedom.

82 thoughts on “The Average 401k Balance And Why It’s Too Low”

  1. Pingback: Career Advice: If You Fake It, You Will Probably Not Make It | Financial Samurai

  2. There’s a good chance you’ll realize a compound annual growth rate of 8%. But there’s a much better chance you’ll get divorced, and you wife will take 50% of the balance:)

    1. later starter

      These days the husband would have rights to 50% of hers as the case may be. Or that was true of some people I’ve known.

  3. NYCBizWriter

    401(k)s are the biggest scam to be foisted on the American public since snake oil. What the money managers won’t tell you: If you’re middle class, it is mathematically impossible to “save” enough to actually retire. Period. Unless your idea of “retirement” is moving into a homeless shelter and eating cat food. For a $50K/year worker to “retire” on half of his income (what he can barely afford to live on when he’s working), he’ll need TWO MILLION DOLLARS in his IRA. In other words, he has to work until his 150th birthday. But the money-grubbing “financial advisors” keep up the 401(k) fairy tale, scaring everyone into handing them 15% of their pathetic paychecks (and charging their hefty fees for the privilege).

  4. thepotatohead

    25 yrs old, 4th yr of working. Stupidly had just been contributing 5% to my 401k to get the company match. Bumped that up to 10% last year. Hoping to bump that up to the $17500 mark this year, but it’ll be tight. Need to do it though, only way to ensure I have a decent retirement.

  5. @ Matt
    If you are saving 1k a month, then you will reach your 50K goal in 4 years, 2 months – assuming zero interest (which is accurate today). So your planning for 5-8 years is actually over-funding the down-payment fund. Instead, you could save about $850 a month, bump up your 401k contributions with the difference and you would still reach 50K within 5 years. (850 * 60 months = 51,000) Also, make sure you understand the vesting period on your employer match. Younger workers, who might be inclined to switch jobs, are shocked when significant portions of the match are held back because of vesting schedules.

  6. I contribute to both a roth 401k and a traditional 401k. I contribute 6% to each and my employer matches 50% of both. When I look online my account has 1 balance. So it appears that my roth and regular 401k are combined into one acccount balance. How does this work with taxes when I go to take them out? Or are they kept seperate behind the scenes? Thanks!

    1. They are kept separate behind the scenes. With my Fidelity account, I can see my balance broken out by “source”, it sometimes shows as just a code, but each code corresponds with a contribution type. If I remember correctly, my company’s plan has a total of 15 or so different source codes ranging, from roth contribution, company match, catch up contribution, roth roll over, etc.

  7. I am 23 and have been working for just over 4 months. I currently contribute 10% and get an employer match of 7%, so 17% between the two. Currently I have 85% allocated in stocks and 15% in bonds, which i will probably keep it at till 30 barring any big market fluctuations. I would max out my 401k but am trying to put away 1k a month in savings hoping to build a 50k nest egg for a down payment on a home within 5-8 years. I’m trying to decide between investing my savings in riskier stocks that trade for under $5, or for bluechip stocks. Obviously more risk, more ‘potential’ reward, but was wondering if anyone has any input on to which I should choose. I am a gambler and young and have no debt of any kind, so I can take a little more risk than a lot.

  8. SO my wife and I are 59 (her) and I’m 58. Collectively we have 1Mil in our work 401K’s (each over 500K). We have 280K in cash, 30K in US Savings Bonds, 150K in a Joint Tenant Act. My wife has a Roll over IRA with 40k, and and a Roth with 32K, I have a Roth with 32K. I’ll have a pension when I retire (plan is age 61 or 62). She has a Cash Value Pension worth 130K.

    She doesn’t think we have enough for us to retire at 62. Thoughts?

    1. How are your income producing assets? $1.4 million is a nice nut, but at a 3% annual return that’s $42,000 a year plus social security and whatever else. Is that enough?

  9. Keep in mind this number ($72,000) is for the average 401(k) customer at Fidelity only. It fails to reflect the millions of Americans who have literally nothing in retirement savings. The Employee Benefit Research Institute claims there are only 50 million 401(k) accounts out there period. If we averaged them in we would probably see the number drop significantly. Pretty sad.

    I’ve only got $40k (31 yrs.) in, time for some catch-up to Fidelity’s average.

  10. middle class

    401k’s are failing people because of unstable markets. Look at the major crashes over the last decade or so. The Tech bubble, 2008 financial crash etc. I have saved for quite sometime and not borrowed off my 401k and have always contributed the maximum and I am slightly above the minimum for my age range. Thank God I have a pension to supplement it, although that was reduced by my company selling out about 13 years ago. They say people near retirement are woefully short in their 401k’s when they retire. They will lead a meager life in retirement, run out of money and live with their kids. I agree with the guy who says $1,000,000 in your 401k at retirement is really not that much.

  11. “By 50 an 60 years old when you retire, you are well on your way to a million dollar 401(k) balance or more. However, the sad thing is that $1,000,000 in today’s dollars certainly buys much less than $1,000,000 dollars 10, 20, and 30 years in the future. Hence, your 401(k) cannot be depended on. It can only be considered a supplement during your retirement.”

    Your calculations are wrong, your contributions would inflate over time too, by age 50 an 60 years old your 401K would be about 2.5 Mill

  12. 401k is not as good as advertised. Big sacrifice while fund managers earn large fees from your savings and sacrifices. Start with what you truly need for retirement. Stop listening to the Social Security scare. Savings, CD, US treasuries. Enjoy life while you can. Rather spend now then at 75 to 80. Again do the math.

  13. So, I have one question. How does fidelity know what a person’s total 401(k) balance is? I’ve worked for 14 years now after college and have a 401(k) with my old employer and another with my current employer.

    If my second one were with Fidelity, would they report me as only having 50k balance when my total is in excess of $130k?

  14. I’m 25 and just started my 401k last summer. I’m currently making $46,000 salary and contributing 15%. My company matches $0.50 on the dollar up to 10%, offers a pension plan (ive got a while but its a nice thing to supplement the 401k), and I currently have $4,000 in my 401k. I cannot afford to contribute any more than 15% at the moment. Should I start contributing the max as soon as I can reasonably afford it and continue to manage my account myself or should I select a model and let it take care of itself?

    1. Depends what model you are discussing. One of those retirement target date funds that asset allocates for you? Not a bad idea.

      If you haven’t read this post, I recommend following the suggested savings rate:

  15. Money Reasons

    I’m up but not by enough. In 2009, instead of taking my money out (wish I had done that in 2007), I increased my contribution percentage amount. It made me nervous, but I did it anyway, so I’m doing quite well right now :)

    I still need to rebalance into a more acceptable risk model though.

  16. For those looking for confirmation bias please skip this post.

    Good article and the replies are encouraging in that people are taking responsibility for their own financial future. In our case we chose a different path of stepping away from our 401K when changing jobs for a couple of reasons: no employer match and extremely small list of choices. I realized that most of the advice I had heard from financial planners over the years was lacking and one sided and decided it was time to educate myself and take control of my financial future.

    6 years ago took the penalty on my 401K when leaving my job and taking on the job mentioned above with no match and lousy options. Took that money and our investing $s since that time and did my own research and investing….wow! I’m not the sharpest marble on the planet but we’ve been averaging about 35% per year since that time with my worse year being about 20%. Spoke with bright financial planners 6 years ago (remember things were cranking along and most were making money) and they disagreed with what I was planning to take on and now one is out of the business and another struggling to keep his family afloat. They’re great people but were brainwashed that there was only one way to do things. Find your investing style and take a portion of your investment and go for it. In my case I hate day trading and look for medium to longer term (2-10+ years) short or long opportunities and things have been good. Studied the cyclical nature of markets and things like the performance of the markets when a dem/rep president is elected, etc.

    There’s more than one way to do things and I wish us all continued success in whatever path we chose.

    All the best,


  17. Hi, I am 54, max out on 401k, started late, but have over $500k now, mixture of Roth and standard, $200k+ in stock options at current value, I am considering exercising the stock and paying off house, though I only have a 3.75% loan, or at least doing it when the tax incentive for the debt goes away in next cople of years. I have 2 questions, one requires the crystal ball and the ouijie board:
    Do you think tax rates may actually be flatter and lower in 10 years? Therefore, it makes sense to get rid of real estate debt, etc
    Does anyone know if the social secuiy statements you get telling you how much money you will get is the value at age of retirement OR is the predicted value today, but could be higher due to inflation and COLA adjustments? I can never understand this from the document, thanks

    1. With a rate of 3.75%, I’d keep it until you actually retire and keep maxing out the 401K. 3.75% is nothing.

      I’m not sure about #2. I think it’s what you’d actually get if you were that retirement age an quit today.

  18. YOU MAKE A DUMB STATEMENT: All I really care about is how much is in the darn portfolio, and I’m pleased to say it is about 25% above its previous peak. Oh so let’s say you contribute $20,000 each year for 5 years and your net loss on your investments is $75,000. You don’t care because your balance is $25,000 higher. And, how can you be 25% above the previous peak, unless you made a 25% gain in one day. In reality, you made many new peaks on your way to your latest new high. Of course, you probably have lost 5% to 15% in the last two weeks.

    1. Exactly. Because my portfolio dwarfs the size of what I can contribute a year ($16,500), performance has been the reason why I’m 25% above the previous peak. When your portfolio gets to be over $500,000 for example, $16,500 is only 3.3%. I certainly have lost some this week, but only 1.3% as I’m 75% cash/fixed income after my portfolio was up 11% at the end of May. I sold equities and am still up 8.5% for the year.

      How big is your portfolio and how are you doing genius?

  19. I am 55 and can retire at anytime with a pension of $3500 per month. My 401k balance is $600,000 of which over $400,000 is my self managed portion. I have $250k in Company stock that produces dividend income. My wife’s 401k balance is $300K and another $100K in municipal bonds.
    She gets a pension at 62 of $2200 per month.

    We always lived off one salary and saved the other. Took charge of our investments instead of letting someone else. Live below your means.

  20. I’m 37 single with no children. With a company match I contribute 17% to the 401k yearly. Currently I total $265,000.00 I will have my home paid for in 2.5 years and have no other debt. I have approx. $24,000 in savings. Can you recommend I do anything different as I would like to retire as early as possible, get out of the rat race and have a little fun in life. My investor tells me if you average a 7-8% yearly return you should triple your investment every 20 years. If this holds true I should be in be in a good spot to retire by the time I’m 57. Your thoughts??

    1. I would make sure you contribute max $16,500 and check on the company match and profit sharing if possible.

      The $24,000 in savings at 37 is honestly very light. I’d think you’d need to jack that up by at least 5X to be on track, and hopefully 20X by the time you turn 57.

      Don’t expect 7-8% yearly return at all. Save more and get a second job if you can!

      1. Huh? He has $265K in retirement savings, not $24k. 24k sounds like his emergency fund. And there is no way you can tell him how much he should have without knowing what his lifestyle is. I make $100k but truely live off$45k.

        “Professionals” tell me that I should base my retirement income on what I make now and I say “BS”. I am making what I make now because I work my butt off. In ten years I want to slow down. I am living off of less now so I don’t have to maintain this pace forever.

  21. I have a question for you: My wife wants to work for just a couple more years (same age as I am.) Her 401K is approaching 100k. I took a part time job until she stops. We have a nice bank account, but I like to keep that pushed in the corner “just in case.” We have about 50K left on the house and property,,,,no other bills. We were talking about cashing her 401K in at 59 and pay the house off, and use the rest as a supplement for 2years until we start drawing on my 401K at 60.

    What’s your draw on that? I know typically one wouldn’t literally cash a 401 in,,,but it would be nice to finish the mortgage about the same time we both stop working.

    1. Sounds like a good plan to me. Def wait until 59.5 to cash out the 401K for no 10% penalty and go ahead and pay off that mortgage. That’s the ideal scenario in a retirement environment, being debt free since you have your own cash and 401K still there. I think you’ll be happier with no mortgage. Cheers

  22. Retired at 53 with a pension. saved 13 percent during my 24 year LEO career. I haven’t put any money in the 401K (TSP) for 3 years since my retirement, but the 400K is now making it’s own money and if I were to put money in now,,,it would be insignificant. I don’t plan on touching it til I’m at least 60 so still have 4 years of some good growth opportunities and I don’t exactly need it right now (can’t believe I would ever be able to say that.)

    It helped, also, to have moved my higher yielding mutual funds to a safe fund JUST before (I mean 2 weeks) the economy dumped in 08. Just had a bad feeling the way the economy was turning. I have made my retirement plans without counting on SS at 62,,,so will be a big plus when I do.

    I know I have been lucky in my mutual fund selections and I have seen my friends take a serious nose dive in 08. I did, however, try to enlighten them beforehand. Guess my best advise, and I’m far from an expert, is to do some good research on the different investment opportunities within your plan and spend a little time each week and watch what is happening in the economy.

    Good luck to you all.

      1. Pension amount is 33,000/year. And yes,,,I do realize that pensions are a thing of the past,,,and I do count my blessings for the luck of having it. Started drawing it when I retired at 53. I was federal law enforcement. I’ve been saying for the last 10 years they were going to end the pensions,,,,have recently heard they trying to push the legislation thru to end it. In reality,,,it just can’t be supported, even tho I made small contributions to it.

  23. Sunil from The Extra Money Blog

    I maxed them all out while employed. Definitely a good decision after seeing what compounding has done over the years…not to mention postponing taxes until later

  24. I’m 33 and have a retirement balance of approximately $175K (mix of pre and post tax). I max out my 401k and IRA contributions each year and get 4% of my 401k contributions matched by my company.

    I feel pretty good but I know I have a long way to go. I’m not counting on Social Security at all b/c it’s so screwed up. If I get it, it will be a bonus.

  25. Financial Independence

    Good, very informative post.

    When we touch subject of financial independence and 401k with friends – my argument is very simple : if your employer match your contribution to 3%, immediately get 100% on your investment.

    The other thing – regardless how tempted are you, there is very tortuous way to get any money out of it. So, even if you go through rough patch – money are there, waiting for your retirement.

  26. I’m not anywhere near the average balance and I’m way above my 2007 high (because I didnt have one then!) I’ve got quite a bit of time to grow my 401 and investments, and I think you’re right – it shouldnt be looked at as an end-all-be-all for your retirement. It needs to be at 1 leg of a 3 or 4 leg stool. Once I eliminate my debt, I’m hoping to increase my retirement savings (I dont have a 401k anymore, I’ve got a pension now)

  27. I’ve been putting away the max (plus the over 50 bonus once I was eligble) for 19 years. Company matches didn’t start until around year 5 as there was another plan in place until then and the 401K was over and above that.

    While I can’t share what I have, it is back to 2007 levels and is quite significant. I too plan to live off other means until I have to start the RMD.

  28. Daniel Rosenhaus

    Great to see participation up, especially when it comes to retirement savings, a topic I am passionate about. I feel that any tactic on saving money is really aimed at allowing you to contribute more to your retirement nest egg. However, I don’t know what to make of the average balance because we don’t know the age. That number for a 30 year old is much better than it would be for a 40 year old,

  29. My 401k is at an all time high too. I believe in contributing the max every year to defer as much tax as possible. Mrs. RB40 also max out every year and she’s making about 60k/year like your example. ;)
    If I can contribute more than 16.5k, I would jump at that chance.

    1. That’s the good thing about a couple. They can combined contribute $30,000 PRE-TAX, and that doesn’t include any matching, which could bring things to almost $100,000 every year! What a no brainer.

  30. I like to keep my 401k holdings pretty conservative so I can focus on contributing as much as I can and not overstress about the performance. Every little bit helps and keeping the contributions automatic each month takes the work out of it and it feels good to check on it every 3-6 months and see how the funds have added up.

    1. I really like the log term 50/50 stocks/bonds balance. It’ll change here and there, but the mix of offense / defense is great so we can sleep better when our not grows.

  31. I really don’t think 401ks are the best answer to retirement savings. I believe longterm Cds are. Simply because Cds don’t get affected by the stockmarket. You can consistently put money into them and really save some money for retirement

  32. I thought that I would see the number “$2500” or something, so $70,000 is pretty impressive (well, not impressive, but better than nothing!). I think people can find it hard to save for retirement because they want to pay off their mortgage first, or they have kids etc. etc. There’s always so many places to put your money. It is very important to save for retirement (because no one else is going to do it for you unless you have a sweet ass pension).

    1. $2,500? Come on now, that would be too pathetic after 10-13 years of saving post college! I was thinking the average would be closer to $100,000 after this time period.

      Either way, I’m happy participation is going up!

      1. I think you’re making a huge assumption on the average age of 401K account
        In the Money an Business section of US News they have an article titled
        “How Your Nest Egg Compares to Your Peers” and although I always question
        the accuracy of these reports without a source to the raw data, they do break
        down the numbers by age group.
        Percentage of 401K accounts by age group:
        20’s: 12%
        30’s: 25%
        40’s: 30%
        50’s: 24%
        60’s: 8%

        Of course, the higher the age group, the larger the sum. In any case, I think that
        assuming we’re dealing with someone in the 30-35 age group for average balances
        is way off.

        Also, remember that Fidelity has 11 million accounts. That’s a small sampling
        of the population who are probably a lot better off financially when compared
        to your common American.

        On average, I SERIOUSLY doubt that someone out of collage, who has typically accumulated a
        healthy debt from student loans, is going to be contributing more than the
        minimum amount required to receive their company match.

        I had zero education debt when I took my first professional job because I chose
        to go the military route to pay for my education. As active duty military they paid
        75% of my tuition, the other 25% + books came out of my pocket…but zero loans.
        Of the coworkers I had which were in my age group, ALL of them paid back student
        loans. Anywhere from $20K to $80K in outstanding debt!

        Anyway, I read your updates with interest, but I really do think that most of your
        followers (and yourself) are the exception and not the rule when it comes to
        financial responsibility.

        Source for the US News article:

  33. Well over here in Canada we have the RRSP, which is pretty much the same thing.

    I am just graduating from university and everyone I have talked to does not even understand the concept of investing early and taking advantage of the account. Delay, delay, delay is the mantra. It’s always a process to explain at a bar that one can still save and live the life.

    Great post as always, but in my age demographic there is still a ways to go before I can help people out on the way to becoming rich.

  34. I really don’t like misleading data like this. It would be nice if one is going to report the average balance of a 401k that one also reports the number of 401k’s held by the average individual. Some people never roll over their 401k’s when they switch employers or prefer their former employer’s plan so they leave the money in place. Others roll their 401k’s into traditional 401k’s. Thus, the average balance reported in the article holds little meaning.

    That said, the overall point of the article focusing on high participation and maximization is a good one. Save now, save often, and keep saving.

  35. The 403(b) is in my plans for next year (after I’m finished with school in December). At least I started investing this year in both stocks and a mutual fund. Yeah, I’ll be working to 75 (at least!) But I’m pretty sure I’ll live to at least 90 so that gives me 15 good years of retirement. ;)

  36. I am maxing out my 403B, IRA and Roth IRA. I even get a bonus because I am over fifty. The real benefit of these programs is to start early. The unfortunate part of that is your earnings are at their lowest. In a perfect world, you start socking away money in a 401 K or IRA at 18 years old. The benefit would be huge! My balance overall exceeds the 2007 peaks, but that includes nearly four years of contributions.

  37. Money Reasons

    Hmmm, interestingly I’m up over 30% from my previous peak, but that number included my contributions and my employers. Still it does feel good, at least until the market has another correction.

  38. I love maxing out my 401k. Watching that balance grow pretty fast and compound AND to get a big tax refund back in the spring (because whose company adjusts withholding assuming you’re going to max your 401k) always makes me feel like I’m pulling a fast one on Uncle Sam. Bwahaha, I’ve got all this money stashed away AND you’re taxing me less! Of course getting a refund isn’t the most efficient use of my money, but it is fun and worth the hundred bucks or less in lost interest.

  39. I’ve not been contributing since 2006 since moving overseas since my company has no 401k plan. So all the savings is in after tax funds… probably better since the future tax rate will be higher than today with a high likelihood.

  40. Jenny @ exconsumer

    My husband and I have always been good about contributing a decent amount (10%-15%) to our 401k accounts — other than a two year period where we were trying different career paths, going to school, etc. I’m 33 and he’s 35.

    Over the past three years, I’ve worked for a smaller company that doesn’t offer a 401k, so I opened a Roth IRA and contribute a portion of my income to that.

    Now that we feel our retirement is on track, we’re aggressively paying down consumer debts and researching the best non-retirement investment options. It would be fantastic to have interest income long before the traditional retirement age!

    1. Sounds like your two are doing well Jenny! Good job! Feels great when both partners are clicking! Interest income is a wonderful thing that is my only definition of passive income!

  41. It’s nice to see that the participation rate is on the up and up…71% is the best I’ve seen for any particular demographic.

  42. Money Beagle

    We’re not contributing the max but we are pretty well above the average balance.

    I could contribute close to the max amount but I’m focusing some of my income on paying down debt faster. I plan on being mortgage free when I retire, and I’m getting a lot of bang for the buck paying down some of the mortgage balance early, as these extra payments help to take payments off the back end.

    1. It really is a tough balance to decide where to utilize that extra dollar. Paying off a mortgage with over a 4% rate now is a good idea with the 10 yr yield only at 3% noe.

  43. The 401k I had with a former employer is about 10 percent above its previous peak. (That one is easy to measure since I don’t contribute to that one anymore.)

    My husband and I both contribute the max to our 401k. However, my employment is so variable. I worked 8 years, took 7 off, worked 4 years, took 1 off, and now I am working again. Not sure how long this contract will last, but I view it as bonus money and save as much of it as I can.

    We do not save 20 percent on top of the 401k though. Kiddos really bleed our accounts dry, but that is ok. They are totally worth it, and money can’t buy the happiness I derive from them.

    1. Good anecdOte that your 401k, despite not contributing is now 10% higher than your precious peak!

      You must share with us more your joys of motherhood, but also hopefully some insight on some of the stresses as well. I’m fascinated by this topic. Thx!

  44. My 401(k) balance is above the previous peak since I continued to add to it throughout the crisis. It is not too far off its all-time high. I don’t think you can fully depend on a 401(k) either like you mentioned. There needs to be other savings and investments. I have selected rental real estate as another vehicle for that. I have 30 year fixed mortgages on those with plans to have them paid off when I am 65 years old. I plan on living off the rental income while letting the 401(k) balance continue to grow until the mandatory distributions.

    1. Sounds like a good plan and a great inflation hedge and money maker. As I spend more time growing the online business, I realize how superior online income is than rental bc of the much lower maintenance/operating costs.

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