When it comes to finances, a lot of us have no idea what we’re doing. And that feeling of cluelessness goes double for your 401(k), as it can be incredibly intimidating to even know how much you should be saving for retirement when it’s several decades away.
Thankfully, Fidelity Investments teamed up with CNBC to give people an idea of how much the average American has saved in their 401(k) by age, which will hopefully give you an idea of where you are at in terms of retirement savings.
According to Fidelity’s findings, by the fourth quarter of 2020, the average person in their 20s had $15,000 saved in their 401(k), with that number then jumping to $50,800 for Americans in their 30s. For people in their 40s, 401(k) savings reached an average of $120,800, with that number getting all the way to $203,600 for those in their 50s.
Given that the 60s are when many people get close to retirement, the numbers finally start to slow down a bit at this point, with the average American in their 60s having $229,100 saved in their 401(k). And by the 70s, the number has officially begun to slightly drop, with Americans having an average 401(k) savings of $213,600.
There’s also the fact of what percentage of your income you should be contributing while you’re saving for retirement. According to CNBC, people in their 20s are saving about 7.4% per paycheck to their 401k, while people in their 30’s contribute 8.3%, on average. The number goes up and up with people in their 70’s contributing up to 12.3% of their pacheck. The bank also recommends that people start saving about 15% of each paycheck in order to be prepared for retirement, which sounds nice, but might be unachievable for the vast majority of earners.
The pandemic, it appears, was also not the best thing for our retirement savings. According to the outlet, about 1.6 million people took money out of their 401(k) to survive 2020 — and did so penalty-free thanks to a rule in the CARES Act that let people take money out without penalties like normal.
If you are not exactly an expert with managing your money, you may be about ready to have a heart attack after seeing those numbers but even if you find yourself behind, it’s never too late to start saving. Also, the reality is, a lot of us just don’t earn enough to save — or have a job that offers a 401(k) plan, nonetheless one that provides a company match. So if the chart freaks you out, you are at least not alone.
And it’s never too late to start if you do get financial access to a savings plan. Saving is saving is saving.