Retirement accounts are arguably the best tool for saving and investing for retirement. They provide two-for-one benefits that encourage savings while providing tax breaks on either the front or back end of your career.
No account is as synonymous with retirement as a 401(k). It's arguably the retirement account, with around a third of working-age Americans (ages 15 to 64) owning a 401(k)-style account. When you consider that most teenagers don't work jobs that include a 401(k), this number jumps up a bit.
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How does your 401(k) balance compare to that of those aged 55 to 64?
For those wondering how their 401(k) balance compares to others in their age range, let's look at ages 55 to 64, because that's when many important retirement decisions are generally made. The average 401(k) balance for someone aged 55 to 64 is $207,874.
The average 401(k) balance could be skewed by those with high balances, so for a different perspective, we can look at the median balance in that age range, which is $71,168.
How much should you have in your 401(k)?
How much you "should" have in your 401(k) is very relative because different retirement plans and ambitions will require different amounts.
However, I will say that retirement guidelines, such as the 4% rule and others, can give you a broad idea of how much you should aim for in retirement.
If you feel like you're behind, it's never too late to raise your contributions, ensure you're taking full advantage of employer matches, and double-check your investment choices to see if there are lower-cost investment options you can possibly take advantage of.
Although a 401(k) is many people's main retirement income source, it ideally shouldn't be the only one. Along with Social Security, retirement accounts like IRAs can be great supplements and come with benefits you don't receive with a 401(k).
