At the end of 2008 -- a year in which the Dow Jones Industrial Average plummeted by 34 percent -- the average 401(k) account balance weighed in at about $46,000. If your balance was below that mark, you're not alone. Half of 401(k) participants had a balance of less than $13,000 on Dec. 31, 2008, according to an analysis of 24 million 401(k) plan participants by the Employee Benefit Research Institute.
401(k) Account Balances Increase With Age and Tenure
Of course, 401(k) savings can vary widely by age, in addition to other factors such as income level, job tenure, and whether employees have access to an employer-sponsored pension plan or other retirement savings.
EBRI's year-end 2008 analysis of 401(k) participants found that average 401(k) account balances increase with age and job tenure. At the low end, employees in their 20s with up to two years of service at their current employer averaged about $3,000 in 401(k) savings. At the high end, employees in their 60s with more than 30 years of service averaged about $173,000 (see Table 1 below).
It's important to take these year-end 2008 figures -- the latest available from EBRI as of the date of this article -- with a big grain of salt, given how the stock market has rebounded since then. Fidelity Investments, one of the world's largest financial services providers, reported "significantly higher" 401(k) balances by the end of 2009. The average 401(k) account managed by Fidelity grew by 28 percent in 2009 to finish the year at about $64,000. By the end of third quarter 2010, the average balance rose to $68,000.
Young Employees See Biggest 401(k) Percentage Gain; Middle-Age See Biggest Dollar Gain
Employees that contribute to 401(k) plans see a substantial percentage increase in their balance when they enter the 25-34 age group, according to an analysis of Vanguard plan participants (see Table 2 below). Few workers have much in retirement savings by the time they reach 25 years of age, so it's not unusual for 401(k) savings to double or triple by the time these workers hit their 30s.
The biggest dollar increase in Vanguard's study went to the 45-54 age bracket, which averaged $42,000 more in 401(k) savings than the 35-44 age group by the end of 2009. The years between age 45 and 54 represent a time when many workers are earning more than ever before in their careers, while socking away as much as they can for retirement.
Table 1: Average 401(k) Account Balance by Age Group and Job Tenure, Year-End 2008
Age Group (Years of Service With Current Employer)
- 20s: $3,237 (0-2 years), $7,001 (>2-5 years), $11,491 (>5-10 years)
- 30s: $7,642 (0-2 years), $14,952 (>2-5 years), $27,809 (>5-10 years), $39,414 (>10-20 years)
- 40s: $11,224 (0-2 years), $20,385 (>2-5 years), $38,510 (>5-10 years), $65,512 (>10-20 years), $101,625 (>20-30 years)
- 50s: $14,670 (0-2 years), $24,004 (>2-5 years), $43,746 (>5-10 years), $76,057 (>10-20 years), $140,407 (>20-30 years), $145,990 (>30 years)
- 60s: $17,619 (0-2 years), $25,130 (>2-5 years), $42,938 (>5-10 years), $74,284 (>10-20 years), $135,018 (>20-30 years), $172,555 (>30 years)
Source: Employee Benefit Research Institute. "401(k) Plan Asset Allocation, Account Balances and Loan Activity in 2008." October 2009: Issue brief No. 335, p. 21. Figures cover 401(k) accounts maintained by participants' current employer; they do not include 401(k) accounts maintained by previous employers or rolled over into IRAs.
Table 2: Average 401(k) and 403(b) Account Balance by Age Bracket, Year-End 2009
- Under age 25: $3,908
- Age 25–34: $17,453
- Age 35–44: $43,765
- Age 45–54: $85,799
- Age 55–64: $124,472
- Age 65 and up: $148,959
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