Average Retirement Savings in the United States

In the coming years, America could face a retirement crisis. Only 1 in 10 Americans are investing 15% or more of their income for retirement. But even more alarming is the fact that half (50%) aren’t investing any money at all.⁴ 

Instead of packing their bags for their dream vacations in their 60s and 70s, millions of Americans will be packing their lunch for another day at the office. That’s the bad news. The good news is, it’s never too late to turn your situation around. You don’t need anyone’s permission to start making your dreams a reality—you can do something about it today.

How do you stack up against everyone else when it comes to saving for retirement? Let’s take a look at what average Americans have saved for retirement by the decade. Then we’ll talk strategy so you can get closer to your retirement goals.

What Is the Average 401(k) Balance in the U.S.?

According to Vanguard, the average employee puts 7.4% of their income into their 401(k), and the average 401(k) balance across the board is $134,128.⁵

But depending on where you are on your financial journey, your account balance could look very different. After all, a 57-year-old accountant who’s been investing for decades has a huge head start over the 24-year-old mechanical engineer who just graduated from college a couple years ago.

What if you don’t have a 401(k) or similar kind of employer-sponsored retirement plan? Don’t worry! There are plenty of other ways for workers who don’t have access to a 401(k) plan to save for retirement. Individual Retirement Accounts (IRAs), Simplified Employee Pension (SEP IRA) plans and solo 401(k)s are just a few alternatives for retirement savings.

How Much Do Americans Have Saved for Retirement by Age?

With that in mind, let’s take a look at the average 401(k) balances that Americans have earmarked for retirement by age, according to data from Vanguard. And remember: You can find ways to improve your retirement savings in every decade of life. As we look at these numbers, remember that the goal isn’t to be “average.” You work too hard for too long to simply settle for average in your retirement savings!

Americans Under Age 25

• Average balance: $7,351
• Average employee contribution rate: 5.4%⁶

Five percent of your income? That won’t get the job done. Time plus compound growth are the two most powerful forces in wealth building. And when you’re in your 20s, those two forces are on your side!

How much will you need for retirement? Find out with this free tool!

The reality is, the earlier you start investing, the better! Even just five years can make a huge difference—and that determines when you can or should retire.

So, in your 20s, even if you’re not earning much yet, build a strong financial foundation. Wait to invest until you get out (and then stay out) of debt. Next, build your emergency fund. As soon as you’ve done that, start investing 15% of your income in retirement. After all, what looks like a little now will look like a whole lot more as you get closer to retirement!

Americans Ages 25–34

• Average balance: $37,557
• Average employee contribution rate: 6.7%⁷

As we can see here, the average American entering their 30s still isn’t contributing enough to their retirement. This is likely because a lot of people in their 30s are balancing big financial goals like saving up for a house or starting a family. Others are still dealing with the headache of student loan payments and other forms of debt . . . meaning their past mistakes are keeping them from saving for the future.

You might not even be thinking about retirement yet, telling yourself, I’ll worry about that later. That’s a big mistake! At this point in your life, it’s time to make saving for retirement one of the top priorities in your financial journey.

After all, one of the top indicators of investment success is your savings rate. Translation? If you want to have enough money saved for retirement, you have to actually save and invest for retirement. Go figure! 

Americans Ages 35–44

• Average balance: $91,281 
• Average employee contribution rate: 7.1%⁸

By the time you get to your 40s, you’re probably making more money than you ever have before. Because of that, it’s so easy to try to keep up with the Joneses. You fall into the trap of buying cars or going on vacations you can’t afford to impress people you don’t even like. But guess what? The Joneses are broke! And if you try to keep up with them, you might end up right there with them.

The median salary for Americans in their mid-30s to early 40s is around $67,600.⁹ Let’s say you started investing 15% of that salary starting at age 40 and did that every year until you retire. If you invest that money in good growth stock mutual funds inside your 401(k) and IRA, you could become a millionaire by age 65. See? It’s never too late to get started! 

Americans Ages 45–54

• Average balance: $168,646
• Average employee contribution rate: 7.7%¹⁰

You might find yourself in one of two places in your late 40s and early 50s. Either you’re feeling confident about your nest egg, like you can almost reach out and touch your retirement dreams . . . or you’re feeling way behind, which could send you into full-on panic mode.

If you’re in that second group, don’t panic. You still have some time to get back in the game! Here are a few things you can do to catch up on your retirement savings:

• Cut all unnecessary spending so you can increase contributions.
• Put each pay raise or bonus toward your investments.
• Downsize your home if your mortgage is a heavy burden.
• If you’re 50 or older, take advantage of the catch-up contributions in your retirement accounts—an additional $7,500 for a 401(k) and $1,000 for an IRA.

It’ll take some hard work and sacrifice, but you can turn this thing around! Also, it’s a good idea to talk with an investment professional to make sure your plan will get you where you need to be.

Americans Ages 55–64

• Average balance: $244,750
• Average employee contribution rate: 8.9%¹¹

Most people would like to step away from their career at some point in their 60s so they can focus on time with family or time to pursue other passions.

Looking at the average numbers, though, we see a different story. Lots of Americans will keep working well into their 60s. Maybe you’re okay with that. In fact, a recent survey found that a quarter of middle class American workers (25%) say that their retirement dream involves some sort of work, whether that’s starting their own business, pursuing an “encore” career in a new line of work, or simply continuing to work in the same field.¹² 

That’s great! But if you’re going to work in your retirement years, it should be because you want to—not because you have to.

You can do a few things to make sure you’re getting retirement ready. First, thanks to a change made by the SECURE 2.0 Act of 2022, employees ages 60–63 can take advantage of a higher catch-up contribution limit than everyone else starting in 2025. For 2025, their 401(k) catch-up contribution limit is $11,250 instead of the normal $7,500.¹³

And second, make sure that you’re entering retirement with no debt whatsoever—that includes a paid-off mortgage. Debt payments of any kind will eat up your retirement savings faster than you realize, so make sure you’ve sent in that last mortgage payment before you walk away from your career for the last time.

Americans Age 65 and Older

• Average balance: $272,588
• Average employee contribution rate: 9.2%¹⁴

This last number is heartbreaking. This shows that many Americans simply aren’t prepared for retirement—$272,000 isn’t enough to get you through all the health care expenses in the later years of your life!

At this point, you should be talking with your financial advisor regularly to work through your options and figure out how to make your retirement savings last throughout your golden years. Here are some things you should keep in mind:

• Sources of income in retirement: Once you stop working, your money has to come from somewhere. Some of the most common sources of retirement income include 401(k)s, IRAs, Social Security, part-time earnings and even real estate properties.
• Health care: Consider whether or not Medicare, the federal government-run health insurance program for people 65 and older, is right for you. If you retire before 65, you’ll need to think about how to pay for health insurance until you’re eligible.
• Long-term care insurance: Chances are, you might need some form of long-term care—such as a nursing home or home-based care—at some point in retirement. Having long-term care insurance in place when you turn 60 years old can help with those costs.

While these numbers might be discouraging, keep in mind that all these numbers are just averages. There are also plenty of millionaires with high net worths who are comfortably living out their dream retirements. They’ve used common sense. They’ve worked hard. And they’ve built wealth that’ll help them leave a legacy for their families and their communities.

And that’s the goal, isn’t it? After all, being generous is the most fun you’ll ever have with money! But if you haven’t even saved up enough to take care of yourself, then how can you expect to take care of the needs of others?

How Much Should You Save for Retirement?

Here’s the reality: If you’re out of debt and have saved up 3–6 months of emergency expenses, you should be investing 15% of your income in growth stock mutual funds for retirement. If you’re getting started later in life, you might need to play catch-up and contribute more than 15%.

Since the 15% rule applies to all sorts of people with different salaries and standards of living, it makes sense that everyone will be aiming for a slightly different target. Work with an investment professional to find out how much money you need to save by the time you retire!

Let’s look at an example using an income of $50,000 and apply the 15% rule to understand how it pans out. (If you make less than $50,000, that’s okay. You can still save for your dream retirement on a small salary.)

So, 15% of $50,000 is $7,500 a year, or $625 a month. If you invested at this rate for 40 years (age 25–65) at an 11% average annual return, you would end up with more than $5 million. That’s a solid nest egg! And that’s assuming you never got a raise in 40 years (which is highly unlikely). You can use our Investment Calculator to plug in your own numbers.

The reason your money skyrockets is because of the basic recipe for investing success: time plus compound growth. It’s not enough to just save plain cash for retirement and bury your money in the backyard like a pirate. You need to invest your money so it grows over time! That way, inflation won’t eat up all your savings, and you’ll be able to live comfortably in your retirement years—which could be decades of your life!

Stay Focused on Your Retirement Dreams

Your goal is to be prepared for the last few decades of your life so you can enjoy your time—whether it’s traveling around the globe, serving your community, or spending time with your children and grandchildren.

And if you’re feeling behind, remember it’s never too late to get back on track! Keep your retirement dreams front and center, then commit to a plan of action that’ll get you there.

No one becomes a millionaire overnight. Keep a long-term mindset and be ready to make some sacrifices along the way. Even if you’ve made some mistakes in the past, remember to focus on what you can control and keep moving forward.

This article provides general guidelines about investing topics. Your situation may be unique. To discuss a plan for your situation, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros.