Average 401(k) Balance by Age in 2023
The average 401(k) balance in 2023 is $97,200, but there is no such thing as a standard 401(k). The variety of options and standards is very broad. This post will shed some light on what 401(k) plans typically include.
We recently dropped a massive post that provided a comprehensive explanation of 401(k) plans and the various opportunities they present to one’s saving ability.
One important characteristic of 401(k)s that we noted is how they are not created equally.
From plan to plan they can range in investment options, contribution amounts, matching amounts, restrictions on in-service rollovers, availability of Roth or Traditional features, and so on.
Reading it, one may wonder, “what’s normal?” Or better yet, “how does my plan stack up to others?”
In this post, we’ll talk about what’s normal for 401(k) plans so you can see how the plan your employer provides to you compares to others.
What is the Average 401(k) Balance?
The latest data I could find showed that the average 401(k) balance as of October 2022 was $97,200, but I think this is a relatively useless statistic.
Clearly, someone in their sixties is likely to have a larger balance than someone in their twenties. And why would you care about either of these if you’re 35?
So, by age, here are the average and median 401(k) balances as of October 2022:
Age | Average Balance | Median Balance |
Under 25 | $4,100 | $1,500 |
25-34 | $22,100 | $8,650 |
35-44 | $63,800 | $21,900 |
45-54 | $128,700 | $39,000 |
55-64 | $189,800 | $56,450 |
65 and Over | $203,000 | $55,300 |
It’s helpful to see the median vs. average because there are some very large 401(k) balances that give the average a big boost.
It’s not unusual to see averages far outpace medians for categories like income and net worth.
The fact that the median 401(k) balance for people over 65 is only $55,300 could be quite disturbing.
That’s below the median annual income for most households which means for most people, it wouldn’t even cover one year of retirement.
On the other hand, many people in their 60s have probably moved all or some of their 401(k) over to an IRA.
If you still have plenty of runway before retirement, get saving now so your savings have time to grow.
If you feel like the 401(k) stats don’t paint an accurate enough picture of overall net worth, check out our post that covers net worth by age.
The numbers are a little better, but still not outstanding.
What is the Average 401(k) Match?
According to the Bureau of Labor Statistics, 68% of private (non-government) employees have access to a company-sponsored retirement plan of some sort.
Of those that do offer a 401(k), 82% provide some sort of matching component in their plans, around 10% offer some form of profit sharing, and the rest offer no match at all. ☹
41% | 100% match on 3% + 50% on the next 2% |
15% | 100 % match on 4% |
8% | 50% match on 6% |
6% | 100% match on 5% |
7% | 100% match on 6% |
While I was building this table, I averaged and weighted the percentage of match that is typically offered to arrive at an overall overage of 4.1667%.
In other words, the average 401(k) provides up to 4.1667% of an employee’s income in the form of an employer match.
What is the Average 401(k) Contribution?
According to Vanguard, in 2021 the average employee contribution to a 401(k) was 7%.
Given the amount of cash floating around in our economy in 2021, that’s probably a little higher than the norm.
Nevertheless, we recommend saving at least 15% of your total income in tax-advantaged retirement accounts; a 401(k) being one option of several.
What is the Average 401(k) Vesting Schedule?
The same XpertHR survey we’ve linked before showed that 28% of 401(k) plans fully vest their employer contributions immediately upon enrollment into the plan.
In all likelihood, these are safe harbor plans that are also exempt from non-discrimination testing.
Elsewhere, 17% of plans fully vested employer contributions after 5 years, 14% after 3 years, and 13% after just 1 year.
What is the Average 401(k) Invested in?
The most common investment ratio is 60% in equities and 40% in fixed-income like bonds.
If you’re younger, you should definitely be positioned heavily in equities.
Target date funds have become increasingly popular as an option to “set it and forget it” and really are an easy way to invest your 401(k) assets without having to worry much about regular rebalancing.
What is the Average 401(k) Annual Return?
The widely referenced range of return is 5% to 8% depending on the investment strategy.
This isn’t very useful information because return is also a function of risk which will vary from person to person.
How much are the Average 401(k) Fees?
According to smartasset.com, the average annual fee for a 401(k) is 2.22% of the assets, but this can vary significantly depending on the quality of your plan.
Frankly, I was a bit shocked to see that fees are that high on average considering you can buy a lot of great index funds through an IRA for less than 0.10%.
At 2.22% that means the 401(k) “industry” collects $154 Billion annually in fees.
I may have picked the wrong line of work.
Does the Average 401(k) Allow In-Service Distributions?
I really wanted to find a data point for this, but I couldn’t locate any reliable information. If you find something, let me know.
In-service distributions could be important for executing a mega-backdoor Roth IRA strategy.
My 401(k) plan does not allow them which is a bit of a bummer, but I don’t know how common that option is anyway.
Does the Average 401(k) Have Traditional and Roth Options?
At the end of 2021, 88% of employers were offering a Roth 401(k) option in addition to a Traditional 401(k).
I can recall this ratio being much lower back in 2008 when I’d regularly appeal to the HR folks at my work to provide access to a Roth 401(k).
Forward the link to your HR folks if they’re stuck in the stone ages and don’t offer a Roth option in your plan. There’s no good reason not to.
Does the Average 401(k) Include an Option to Purchase Company Stock?
While relatively common decades ago, only 7% of plans offer company stock.
I’m not an expert on why, but does Enron ring a bell? I’m just guessing that’s one of the issues from years ago that has led to the decline in popularity.
If you have another question about 401(k)s, visit our contact page and shoot us note or reach out through our social media channels.
