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See How Your 401(k) Stacks Up Against This Plan to Retire Rich


Vanguard reported the average 401k balance at year-end 2013 reached a record high of $101,650. It’s great news that our collective retirement pot is growing. But what does the average balance tell us? Not much. We are all at different points on the road to retirement depending on our age.

Below is a chart of average account balances by generation. Here we can see how we stack up against a peer group. But is the average what we should be striving for? Is this enough to retire comfortably?


To answer that, we need look at some other estimates on what we should have.

Financial firms often suggest a benchmark based on your final salary – somewhere in the range of 8 to 11 times your last year’s salary is what they say you should have by the time you retire. Baselines like that are helpful because they’re a line in the sand. But if you don’t know what will be earning at 65, it’s hard to know if you are on-track. 

So what should you have saved now?

How much you should have saved depends on your goals and desired lifestyle. With that caveat, let’s put a stake in the ground. Below is a 401k savings chart “for a healthy retirement” from Personal Capital’s Can I Contribute To A 401k And An IRA post.  The chart is based on assumption outlined below, and has a Low End and High End for each age group. For example, if you are 35 (the average age of an American), the chart’s guidance is $218,000 for the Low End and $350,000 for the High End. The numbers are aggressive, but this is just an exercise of what your savings could be – across all your retirement accounts, including an IRA, not just your 401k. It doesn’t include any company match, though, so it is conservative in some areas. 


The chart is based on the following inputs:

  • It assumes you start full-time employment at age 22 after college or vocational school and join a company with a 401k. The chart is more forward looking instead of backward looking since 401k contribution limits were lower in the past.

  • You contribute $8,000 to your 401k after the first year. From the second year onward, you contribute the maximum amount to your 401k of $17,500.

  • The Low End column calculates what you could potentially have in your 401k after so many years with a constant $17,500 a year contribution, zero company match, and no growth.

  • The High End column calculates similar levels of contributions, but includes anywhere from 5-10% growth compounded over the next 43 years. Numbers have been rounded up to make the numbers easier to remember. There still is no company match.

  • The chart can be used as a guide for your total savings amounts, including your IRA, Roth IRA, and after-tax savings. The chart is for one person, but can also be used as a guide for a married couple if one spouse decides to no longer work.

Based on the chart, it is possible to retire as a millionaire by the age of 65. This might sound absurd given that less than 3% of the American population are millionaires. But if you are 22 years, in 40+ years, a million dollars might have one-third of its purchasing power, depending on inflation. So how do we start on the path if we are not there yet?

As soon as you can uncomfortably start maxing out your 401k, go for it. If your monthly savings doesn’t hurt a little bit, you might not be saving enough. As you can see from the High End column, compounding really does do wonders when there is a positive annual return. Even with no compounding, you will end up with 14X – 63X more than the median household. 

Now that you’ve seen how much you can potentially save in your lifetime, what’s stopping you?

Join Personal Capital and run your 401k through our free 401k Fee Analyzer. To do so, simply:

1) Log onto the Personal Capital Dashboard.

2) Go to the Investing tab on the top right.

3) Click the 401k Fee Analyzer to see the results of how much you’re paying in fees.

4) Adjust your contribution, employer match, fee percentages, and return estimates to calculate what you’ll have by your target retirement age.

Reduce Your 401k Fees With Personal Capital

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Personal Finance


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