How Much Should I Have in My 401k?

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If you’re wondering how much money you should have in your 401k your wait is over. Retirement savings is much of the talk in today’s personal finance world.

Personal finance aficionados everywhere are sounding off about the dire straits of the average Joe’s retirement savings situation.

While it may be true that many people are underprepared in regards to retirement savings, I say let’s drop the pity party and get to work to change that.

Tip: Check out Blooom which will give you a free analysis of your investments in your 401k.

No matter what your current retirement savings situation, there are things you can do to increase the amount of money you’ve got saved for retirement – and decrease the amount of money you’ll need to retire as well.

But in order to devise a plan for increasing your retirement savings – if needed – you’ve first got to know if your current 401k balance is sufficient, or if it carries the potential of leaving you short-changed financially during your retirement years.

How Much Should I Have in My 401k? Based on My Age

There are a few different schools of thought on how much a person should have saved in their 401k based on their age.

Every financial expert has a different opinion. When deciding what the right number is for you, I think one thing to keep in mind is that it’s better to have more saved than less.

Creating a potential post-retirement budget as a guideline will help you determine how much money you’ll spend after you’re retired.

In an ideal world, you will be completely debt free by the time you are retired and have minimal housing and other expenses. Aside from normal retirement expenses, you’ll want to be prepared to cover unexpected medical bills and other expenses as well.

And it’s important to remember that you’ll need to have money set aside for replacement vehicles, etc.

Obviously, a person’s income and expenses can make a difference when it comes to how much they should have saved at each interval age, but here are some general guidelines.

Use these guidelines in conjunction with your projected post-retirement budget to find out if you should have more or less saved by the time you retire than what is suggested here.

By Age 30

By the time you are thirty, you should have a minimum of one year’s salary (use your current salary for all equations) saved in your 401k. Currently, the average salary in the United States is $56,500.

If you started saving right out of college this shouldn’t be unrealistic at all. If you didn’t start saving until your late twenties or early thirties you may need to do some catch up contributions.

By Age 35

By the time you reach thirty-five, you should have two years’ worth of salary saved in your 401k. This is an average of $113,000. The five years of compound interest between ages thirty and thirty-five and your continued contributions should make this possible.

By Age 40

By the time you’re forty, you should have three years’ worth of salary saved in your 401k. The average salary here is $169,500. If you started saving much later, as in your mid-to-late thirties, catch up contributions are vital.

By Age 45

By the time you turn forty-five, you should have four years’ worth of salary saved. An average salary at this point is $226,000. Again, the age in which you started saving could have an impact – for better or for worse – on how much you have saved at this point.

By Age 50

This is a good checkpoint age and you should have five years’ worth of your annual salary saved by age fifty. The current average is $282,500.

If you don’t, now would be a good time to start making those catch-up contributions and to start saving in other retirement vehicles such as a Roth or Traditional IRA as well.

Also, you should start seriously considering getting all debt paid off at this point, including mortgage debt.

Debt payments are a serious hindrance to a comfortable retirement life.

As an aside, Deacon’s new book, You CAN Retire Early, has a plethora of valuable information on creating a plush retirement life.

If you’re serious about retiring early or even about simply retiring comfortably this is an informative and inspiring read.

By Age 55

At this point you should have six times your annual salary saved. The average salary amount is $339,000. Again, catch-up contributions are vital if you’re behind.

With only ten years until the typical retirement age, you’ll want to make retirement saving a major priority if you don’t have as much saved as you would like to.

Think of increasing your 401k and other retirement savings as buckling down big time to achieve a goal worth every effort: a comfortable retirement with little or no money worries.

By Age 60

At age sixty you should have seven times your annual salary saved. This amounts to an average salary of $395,500. The wonders of compound interest should be working seriously in your favor at this point.

By Age 65

Age sixty-five is when most people who haven’t retired already are thinking seriously about gliding into a comfortable retirement.

At this point you should have at least eight times your annual salary saved. By this age, the average salary is $452,000. So, if you’ve been making $70,000 per year, you should have at least $560,000 in your 401k account.

Having Enough Saved for Retirement is Important

When retirement is years or even decades away, it’s tough at times to find the motivation to save for a time period which you’re finding hard to imagine ever existing.

Maybe this story of retirement savings shortfall will help you get inspired to save more.

In Chris Hogan’s book Retire Inspired, he shares the story of financial clients who weren’t all that interested in getting their financial act together – until they had a serious wake-up call.

The couple had come in for a meeting with Chris to learn how to better manage their money, but it was clear to Hogan that they really weren’t ready to make any real changes in how they managed their cash.

They weren’t paying all that much attention to his advice and didn’t appear serious about making strides with their financial situation.

When that first meeting ended, Chris had little reason to believe any of the changes he talked about with the couple would be made.

A short time later however, the couple called Chris again, begging for a second meeting with him.

As he counseled them in this second meeting he could tell that something had changed and that now they were very serious about managing their money wisely.

Upon asking what had happened to cause such a major change in their perspective, the husband told this story (paraphrased):

I was visiting my elderly aunt one day as she’d asked me if I would come and mow her lawn. Part way through the job I went in the house to get out of the heat and search the fridge for a sandwich or something small to eat.

The fridge was empty. So were the cupboards. Expect for several cans of dog food.

The next words the man spoke, said Chris, will stick in his mind forever.

Chris, my aunt doesn’t have a dog.

Yep, Dave Ramsey’s warning of having to live off of Alpo during retirement had come true for this man’s aunt, and it scared him silly.

He didn’t want his and his wife suffering the same fate as retired persons, and he also felt badly that he wasn’t in a financial situation where he could provide his beloved aunt much help.

So, he knew it was time to get serious, both about paying off debt and about saving more money for retirement.

I’m guessing that when you envision your retirement years you don’t envision daily struggles for basic needs.

Instead, you envision a life where you have the freedom to spend more time with family, travel, help others, or fulfill long lost dreams such as getting that college degree.

Know that your dream retirement life CAN happen – if you are willing to take the steps to make sure you’re saving enough now.

Check out the 401k savings facts below to determine if you’re on track for a wonderfully comfortable retirement life or if you need to step up your game to make that comfortable retirement life happen.

What You Need to Know

If your employer offers a 401k plan, it’s usually a smart idea to take advantage of it. 401k monies are pre-tax contributions to your retirement plan that reduce your taxable income.

Your employer may or may not offer a match program where they contribute additional money to your 401k based on what you contribute.

Some employers contribute a 100 percent match up to a certain percentage of your pre-tax income, such as a 100 percent match up to six percent.

Others contribute a smaller amount, maybe a 25 percent match or 50 percent match on what you contribute.

Either way a match is FREE money and should be taken advantage of. For instance, if your employer contributes a fifty percent match up to six percent of your income, you should invest at least six percent of your pre-tax income into your 401k account.

As of 2017, 401k contribution limits for 401k participants were maxed out at $18,000 per year. Catch-up contributions for those aged fifty and over stand at $6,000 per year for 401k participants.

The plan for 2018 is to increase 401k contribution limits to $18,500, allowing you to save even more for retirement.

If you are able to, it’s a good idea to save up to the annual contribution limit if you can, but I realize that may not be doable for many lower and lower middle class income families.

Before we start talking about what might constitute sufficient savings, let’s talk about a recent report that shares current median retirement savings based on age.

What is in Your 401k

Do you know how your 401k is actually invested? If not, check out Blooom which will give you a free analysis of your investments.

In addition to showing you how you are invested, they will help you discover and reduce fees so you can keep more of your hard earned dollars. They do have a netflix like subscription of $10 per month, but right now you can get a free trial for a month to try it out.

Current Retirement Savings Balance

Unfortunately, many people are woefully under-prepared for retirement from a financial standpoint. Here are some statistics on the median current retirement savings balances of Americans based on their age.

Families BetweenMedian Retirement Savings
32 to 37$480
38 to 43$4,200
44 to 49$6,200
50 to 56$8,000
56 to 61$17,000

Source: How Much the Average Family Has Saved for Retirement At Every Age

As you can see, there are a large number of families that are vastly under-saved for retirement. The mean averages in this report bring the numbers up substantially, which means there are a small number of power savers in each category who have substantial retirement savings. Let’s look at the mean numbers from this report.

Families BetweenMean Retirement Savings
32 to 37$31,644
38 to 43$67,270
44 to 49$81,347
50 to 56$124,831
56 to 61$163,577

Again, the mean averages show us that there are a few who are saving substantially for retirement, which is a good thing – for them. So what should you have saved for retirement based on your current age? Let’s talk.

Increasing Retirement Savings

In an ideal world, everyone would start saving for retirement straight out of college and continue doing so for their entire working career.

However, life gets in the way for many people and saving in a 401k is often not a priority or not a possibility.

Lower income earners have an even more difficult time putting away money, especially if they’ve got a family to support.

If you are behind on retirement savings, read on to discover some tips for finding more cash to increase your retirement savings to get it where you want it to be by the time you’re ready to retire.

1. Start Living on a Budget and Tracking Your Expenses

The fact is that until you know where your money is going each month you’re going to have a hard time finding money to set aside for retirement savings.

See Well Kept Wallet’s Resources Page for Deacon’s Starter Budget Form and Financial Game Plan form. Both are free for Well Kept Wallet readers.

The reason it’s so important to discover and track where your money is going each month is so that you can identify wasteful spending and reroute it towards causes that are more important to you.

Many people find when they start tracking expenses that they are spending money in $5, $10 and $20 increments (and sometimes even more) that seems like it’s not a lot but adds up to hundreds or thousands of dollars each month.

When my husband and I started tracking expenses in 2013, we were able to cut our expenses down by nearly $1,000 a month – and we were making well under $100,000 per year at the time.

By trimming grocery expenses, cutting back on entertainment costs and being more mindful of each purchase, we found a lot of waste in our spending – waste that we were able to use for much more important things, such as paying off our debt.

2. Increase Your Income if Need Be

Sometimes a lack of retirement savings is caused by mismanaged income. It’s common to get caught up in everyday frivolous spending that seems harmless but causes major savings deficits over the years.

Other times there is a true lack of income that has caused a person’s inability to save for retirement. If that’s the case with you; you’re managing your money well and minimizing waste but just don’t make enough to save what you need to save for retirement – you may need to increase your income.

Luckily, there are lots of options out there for doing so. You can pick up a part time job, ask for overtime hours at work or consider one of the dozens of side hustle options out there.

You can also increase your income by selling stuff you have and don’t necessarily need, and then taking that cash and using it to fund your 401k or other retirement accounts.

It’s important to remember however that as you increase your income, you need to be sure to take that extra money and target it all toward retirement savings.

It might be tempting to use it for fun stuff like vacations and new and shiny things – especially if you’ve been living on a tight budget for a long period of time.

Don’t make that mistake. Instead commit to funneling all extra income into your 401k or other retirement accounts, even if it’s only for a specified period like five years or ten years.

After that time is up you’ll likely see a significant increase in your retirement savings that will help ensure you won’t be struggling to live in your later years.

3. Just Do It

Remember the old Nike “Just Do It” commercials? The point of it was to get consumers to put on their Nike tennis shoes and get out there and exercise.

“Just Do It” t-shirts and signs were everywhere during those prominent Nike years and everyone who was anyone work Nike tennis shoes.

If you’re behind on your retirement savings you need to have the “Just Do It” attitude. You need to decide that you WILL increase your retirement savings no matter how tough the going might get.

Being that 401k contributions are pre-tax, you probably won’t notice much of a difference in your paycheck anyway.

And most people find when faced with taking home a smaller paycheck that they simply adjust, learning to make do on less because they have no other choice.

In the meantime, your 401k contributions are working silently on your behalf, growing and growing to create a lush retirement fund while you sleep.

Think of increasing your retirement savings as running a marathon or saving to buy or build a home with cash.

Each day you’ll take small steps. Maybe you’ll sell something on eBay and be able to add another $100 to your 401k account.

Or you’ll cut your grocery bill by $50 one month and be able to put that money into an IRA. Each step you take might not seem as if it will make much of an impact, especially if you’re really far behind on your retirement savings needs.

However, you will find that combined with the power of compound interest your contributions will start to grow. And grow. And grow!

Over the course of a decade or longer you can see a significant change for the better in your 401k and other retirement account balances if you’re willing to make small changes that result in more money toward retirement savings.

Debt and Retirement

It’s pretty common these days for people to carry some sort of consumer debt such as a credit card balance, car loan, student loan or personal loan – or a combination of all of the above.

It’s also common for many people to carry a mortgage loan.

In fact, this 2016 survey by Value Penguin shows that the average person aged 65-69 has an average credit card debt balance of $6,876.

This New York Times article from November of 2016 stated that homeowners over 65 had a median mortgage balance of $82,000.

Those kind of debt payments can easily add a thousand dollars or more to a retiree’s monthly living expenses.

With living expenses so much higher, 401k and other retirement balances need to be much higher as well.

If you’re behind on retirement savings as it is, you’ll have a lot more catching up to do if you plan on carrying debt into retirement.

On the other hand, if you can commit to no more borrowing, saving up a few months’ worth of living expenses in an emergency fund and creating a plan to be debt free by the time you retire you’ll be able to live on less in retirement.

That means that your catch-up contributions if you’re behind on retirement savings won’t have to be as large.


No matter what your current 401k and other retirement account balances are, there are things you can do right now to increase your retirement savings and put yourself in a situation where you need less to live on.

Don’t listen to the naysayers who speak doom and gloom over peoples’ retirement savings situation. While those negative messages may portray the facts, change is indeed possible.

But it’s up to you to make the decision that you’ll change your current spending habits and do things differently so that you can get your retirement savings where it needs to be.

I know some of those changes might be intimidating. And depending on your individual situation, saving enough for retirement may mean you need to make serious changes such as downsizing your house or seeking out a higher paying job.

Big life changes such as these can be stressful, but it’s important to remember that the changes are for the purpose of you creating a more financially secure situation for yourself – both now and in the future.

The smaller house, the better job, the relinquishment of “stuff”, it’ll all help you get to where you want and need to be financially.

It’ll help you change your life from “always struggling for money” to never giving money a second thought because you know you’ve put yourself in a secure situation by changing the way you manage your money.

So, throw aside any temptation to panic or give up and just get it done. You got this!

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2 responses to “How Much Should I Have in My 401k?”

  1. Josh Patoka says:

    I don’t think I’ve ever seen the savings milestones broken down this way for a 401K. Usually, most experts say you need $X when you retire and to contribute enough to at least capture the minimum employer match. I’m guilty of spreading the same advice, but, my viewpoint is readjusted in an encouraging and achievable way.

    • Laurie Blank says:

      Thanks, Josh! Obviously the numbers will be different for everyone, but I think the milestone approach helps to give people something to aim for at every age. Looking at that final huge number can be so overwhelming. If people can work to at least increase what they’re saving now, if needed, they’ll be in a better position.

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