If you’re saving for retirement in a 401(k), you may be wondering how your balance compares to that of the average American. And Vanguard may have your answer.
How does your 401(k) balance stack up?
In 2020, the average 401(k) balance for Vanguard participants was $129,157, according to Vanguard’s 2021 How America Saves report. The median balance, however, was considerably lower, coming in at $33,472.
Whenever you have a median that’s considerably lower than the mean, you can infer that more people have less than the average than more. Or, to put it another way, that average $129,157 balance may be coming as a result of a small percentage of 401(k) participants who have saved extremely well and are pulling the mean upward. But that $33,472 may be more reflective of what the typical saver has actually socked away to date.
How much retirement savings should you have?
There’s no magic savings number that’ll guarantee you financial security in retirement. A good rule of thumb is to stash away enough cash so that by the time you leave the workforce for good, you have 10 to 12 times your ending salary on hand in savings.
But remember, that’s the total you should be aiming for at the time of your retirement. And so if you’re 30 years old and are sitting on a retirement plan balance of $33,472, or something in that vicinity, you may not be in such poor shape.
