A record number of 401(k) holders at Fidelity Investments hit millionaire status in 2018. Not one of them? You’re in very good company: A seven-figure 401(k) balance is the exception, not the rule.
In fact, the average 401(k) balance at Fidelity — which holds 16.2 million 401(k) accounts and is consistently ranked as the largest defined contribution record-keeper — was $106,500 as of September 2018.
If that still seems high, consider that averages tend to be skewed by outliers, and in this case, that number is being propped up by those rare millionaires. The median, which represents the middle balance between the highs and lows, is just $24,800.
No matter which number is closer to your reality — and certainly for some, both will feel out of reach — it’s important to remember that numbers like this are akin to train wrecks: They will tempt you to gawk, but they won’t likely offer you much actionable information.
The median and average 401(k) balance at every age
Slightly more useful are the median and average balances by age. That’s because the IRS sets contribution limits for 401(k) accounts, currently $19,000 per year ($25,000 for those 50 or older).
Even if you made the maximum contribution every single year and posted double-digit investment returns — both of which are highly unlikely; combine them and you’d be a retirement superhero — it would take nearly 20 years to hit a million. That makes it unfair and fruitless for, say, a 25-year-old to compare her balance to the average for savers of all ages.
The below numbers show how 401(k) balances increase with age, at least until participants start drawing on their money in retirement.
Average 401(k) balance: $11,600.
Median 401(k) balance: $4,000.
Many of the participants in this age group are new to working and new to saving for retirement. Yet even at this young age, it’s important to prioritize contributing to your workplace retirement plan, especially if your employer matches a portion of your contributions.
Still, general recommendations suggest aiming for a retirement balance equal to between half and all of your annual salary by age 30. This group may be falling short of that, though these numbers don’t reflect what they may have saved elsewhere, in individual retirement accounts like Roth or traditional IRAs.
Learn more: IRA vs. 401(k)
Average 401(k) balance: $43,600.
Median 401(k) balance: $16,500.
At this point, whether measured by the average or the median, participants have increased their balances roughly fourfold.
One point that becomes increasingly important as participants age: Fidelity’s analysis treats each account separately, which means balances aren’t aggregated by account holder and then averaged. As people age and spend more time in the workforce, they’re more likely to hold more than one 401(k), especially if they’ve changed jobs without rolling over or combining accounts.
Need to simplify? Here’s how to roll over an old 401(k)
Average 401(k) balance: $106,200.
Median 401(k) balance: $36,900.
Another solid jump by this age range, with both figures more than doubling — the last time we’ll see a percentage jump that large between age ranges. That’s likely at least partially a product of peak earning years: According to compensation research company Payscale, for women, pay tends to peak at age 39; for men, age 48.
Average 401(k) balance: $179,100.
Median 401(k) balance: $62,700.
This group has hit the age at which catch-up contributions are allowed by the IRS: Participants age 50 and older can contribute an extra $6,000 a year in 2019. That can be a helpful Hail Mary for those feeling behind at this point, assuming that extra cash is available to put toward retirement.
Average 401(k) balance: $198,600.
Median 401(k) balance: $63,000.
Growth has slowed here, likely due to the fact that the latter half of this group may actually be drawing down their 401(k) balance to start spending the money they’ve accumulated. IRS rules allow 401(k) distributions to begin at age 59½, though many people don’t retire until later: The average reported retirement age for Americans who are currently retired is 61, according to Gallup, and the Social Security full retirement age for people in this group is 67.
Following this, 401(k) balances begin to fall as more people start tapping their accounts. The average balance for those 70 and older is $186,800; the median is $52,400.
What you can learn from the average 401(k) balance
Again: not much. This is a fairly arbitrary benchmark. In the aggregate, it can speak to how workers in general are doing when it comes to saving for retirement, but it does little to help you analyze your own situation. It’s also limited to people who have a 401(k); many workers don’t.
A better approach to benchmarking your efforts: A retirement calculator, which will give you a more personalized recommendation for how much you should have saved now, and how much you’ll need at the end of the line.
Finally, it’s worth noting that you may or may not want to put all your retirement eggs into a 401(k) basket. Once you’ve earned your employer match, there can be benefits to spreading your money around among other retirement accounts, such as an IRA. We have a full guide to IRAs here.
Arielle O’Shea is a personal finance writer at NerdWallet. Her work has been featured by Esquire, Money, USA Today, Forbes and The Associated Press. Read more.