Average Retirement Accounts by Age | Benefits of a 401k| Our 9,000 401k Balance

We share the average retirement accounts by age and the key benefits and how we are tracking to our age group with all real numbers like always! Thank you so much for watching!

Welcome back to road to fire we’re a family of three documenting our journey to fire financial independence retire early let’s chat about the average retirement account by age i’ll outline the average retirement accompli age for both fidelity and vanguard holders outline the benefits of our 401k and how our portfolio stacks up in our age group with all our numbers

Like always so please hang with me but based on our income we are behind that is our gross income rule of thumb says that by the time you reach your 30s you should have about one to one and a half times of your salary saved for retirement for us that would be about 450 000 we aren’t there yet now this rule of thumb is from some arbitrary financial guru but it does

Kind of make sense the high earning years for women is in the late 30s early 40s and for men late 40s to about early 50s don’t ask me why so it does seem like your 30s is when you finally start to hit a financial stride or you’re expected to be but because we fell into the classic double income trap early on we have some making up to do my husband and i in our early

30s so we do have time but i like to keep this rule of thumb in the back of my head just as a guideline but i have to say the obvious economic circumstances that most young people are facing today or within the last two decades is definitely unique making it harder to save for retirement for example stagnant wages recessions dot com bus a pandemic insane college

Tuition fees leading to crippling debt limited health care benefits predatory lending practices and the list goes on now these aren’t excuses but facts so give yourself grace especially when you view your numbers against the averages outlined here so what are the classic or common retirement accounts now there are many different types of retirement accounts and

When you talk to fire journeyers non-taxable brokerage accounts are definitely included but i want to stick to the standard investopedia definition of retirement accounts you will have your company sponsored plans that include 401ks 403bs 457b depending on when you work maybe pensions are included as well if you’re lucky you then have your individual retirement

Accounts such as roths traditional iras and then there are steps for small business owners these are the most common retirement accounts but i know i’m probably missing a few we hold our money in the following two locations now i asked this community where most of your stock investments are housed and it looks like company sponsored plans are the most common place

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For us it’s iras and that’s where we roll over all of our old 401ks but here is our current order of investing all of our investing dollars go through this funnel i made an entire video on why we do it this way but by no means is this a blueprint for fire it’s just our own personal order of investing now out of all of these accounts i would say that the 401k is

Probably the most important if you have access to it not every company offers a 401k but for those who do have access sadly most people don’t take advantage of this first step which is leaving so much money on the table we always i mean always invest in our 401k to at least our company’s match and the number one reason is simple well who doesn’t like free money

Your company doesn’t care if you don’t invest in their 401k because it’s an expense for them but it’s a big benefit for you taking advantage of the match will put you further and faster on your journey to fire now my husband was a contractor for many years but within the last few years we made a decision to switch him over to a full-time job with benefits now his

Pay was cut as contractors can make a lot of money but most contractors come with limited to no benefit and rarely come with 401k let alone a match we took the pay cut so he could find a job that offered her 401k and match to help us get closer and faster to fire now do i miss the higher income yes but i know this was the better option for us in the long run so

What does the average 401k balance look like by age here is data from vanguard’s nearly 5 million 401k accounts for future retirees by age within the united states one thing to call out is this only looks at 401k accounts and not total investments and is based off of vanguard account holders hang on for the fidelity data and the data breaks out the average 401k

Balances and the median always look at the median as the average includes crazy outliers on both ends so for our age group of 25 to 34 the average balance is just under 27 000 and the median is around 10 000. this is a bit lower than i expected but understandable as most people don’t start earning solid salaries until a few years out of college right now we have

A combined 29 000 in our 401ks as of july if you individualize that that’s around 15 000 or 14 500 a piece keep in mind that we do have a lot of our money in our ira versus our 401k so that can explain why we’re a little bit behind based on this data so here’s the data for fidelity fidelity pulls this data annually and it has over 16.5 million 401k accounts now

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Our 401ks right now are with fidelity but have been with vanguard in the past overall the balances are a bit higher for fidelity versus vanguard for our age range being 32 and 33 we are well behind the 401k average of just around 42 000 and closer to the median and around 16 500. not sure what this says about fidelity 401k account holders but one thing to note

Is that the age range are not exactly apple to apples when looking at these data and that could be skewing the data overall now there are two key benefits of a 401k but trust me there are many more number one is compound interest or compounded growth because you as an employee contribute to the match let’s say three percent and your company is contributing the

Same three percent you are essentially doubling your impact per pay period to this account the best part is that the three percent does not cost you anything now i had an employer in the past contribute up to 10 to my 401k in one year they did contribute more than i did to my own individual account now the second benefit is all about taxes contributions made to

A traditional 401k is tax deferred and your taxable income for that year is lowered for example if you make seventy thousand dollars and you contribute ten thousand dollars a year to your 401k your taxable income will be around sixty thousand dollars in addition your savings grow tax deferred so any money made on interest dividends or capital gains aren’t taxed

Until and this is a big until you reach traditional retirement and withdraw that money personally if you have access to a 401k leverage it now over half of americans don’t have access to a 401k it’s mainly because a 401k is an expense to an employer despite research showing that the long-term benefits of having a 401k as part of a compensation package is worth

It but get this of those who do have access to a 401k only 32 are invested in one now not every company offers a match but the tax benefits alone should be enough to get you started in your 401k program now i know many people ask well i won’t be able to access my 401k until i reached additional retirement which is not true at all a roth conversion ladder can be

A great workaround now there is always a way to access your money so here’s our july portfolio update i’m working on the august portfolio update video but time has been escaping me plus it’s also wedding season but based on the charts we just reviewed my husband and i are definitely behind where we need to be from our 401k point of view but we both started a new

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Job within a less than a year ago so it’s expected for both our accounts to be relatively low i wish the data provided looked at all of the retirement accounts by age and not specifically just 401ks but it’s a good baseline to see where you are in your age group but if you look at our ira number it shows a better view as this represents all of our past foreign

Case from previous jobs collectively we are still behind the rule of thumb number based on our income but we are definitely pushing along now i hope we’ll be able to get our investments over 400 000 by the end of this year it seems doable but it’s partially out of our hand but things are going to change and i won’t be disappointed if we don’t retire in the eight

Years as originally planned but there is this narrative that you have to retire with an x amount of years for it to be true fire that i retired in my 30s and 40s is great but it’s not everyone’s plan and that’s okay as well we are targeting our 40s but even if we retire in our 50s i’ll still feel blessed and happy financial independence retire early means different

Things to different people but one thing is for sure the goal is to retire before traditional timeline of what 65 or 67 it doesn’t mean retiring before i get gray hair if so i’m already out but i’m learning to find peace and running my own race at my own pace especially when it comes to our financial journey or financial marathon right now my employer offers a low

Percentage match in my opinion this is probably the lowest i’ve received in the last five to ten years one or two percent might not seem a lot but if you take that off of your gross salary it does add up over time one thing i always tell friends who are trying to jump or find a new job comb through the entire compensation package down to the fitness benefits i wish

I had paid more attention to these fine details if i did i might have stayed at my old job a little bit longer to maximize the 10 match to help us reach fire a little bit faster but for those who do have a 401k match what percentage does your company offer now my husband and i are just below four percent but i feel that is now the norm let me know in the comments

Below now if you made it this far thank you so much for watching but don’t forget to like comment and subscribe below until next time

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Average Retirement Accounts by Age | Benefits of a 401k| Our $29,000 401k Balance By Road to FIRE