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Average 401(k) Balance by Age and Location

According to Fidelity, the nation’s largest administrator of retirement assets with over $3 trillion of assets under administration, the average 401(k) balance in the country increased by 2.3%, to $97,700 at June 30, 2017. This is a new record, which surpasses the $95,500 average balance at the end of March 2017. Some of this increase is due to market growth, as the S&P 500 increased 2.57% in Q2 alone. Some of the increase, however, is attributed to employee and employer contributions. In addition to hitting record high balances, Americans are also contributing a record amount into their 401(k) plans. The individual employee contribution percentage was 8.4% during the 2nd quarter of 2017, a hair above the contribution rate during the prior quarter.

Although having an average 401(k) balance number is handy, it doesn’t tell people too much about where they are relative to their peers. For this it’s important to separate people into groups based on age, since older people have had a longer time to accumulate savings. What is the average 401(k) balance by age? According to Fidelity, the average 401(k) balance for the following age groups are: $10,700 for ages 20-29, $40,800 for ages 30-39, $97,400 for ages 40-49, $162,700 for ages 50-59, and $176,700 for ages 60-69. As expected, the average 401(k) balance increases the older people get, generally topping out when people are in their sixties. After this, individuals begin drawing down their balances. The chart below shows the average 401(k) balance by age along with the individual contribution rate (excluding employer match).

Average 401(k) Balance by Age

This quarter marks the fifth straight quarterly increase in average 401(k) balances. Below is a chart showing the rise of the average 401(k) balance over the last two years, broken down by quarter. Compared to the prior seven quarters it’s visible that people are enjoying the benefits of rising equity markets.

Average 401(k) Balance Over Time

Is it possible that we’ll hit an average 401(k) balance in America of $100,000 anytime soon? Depending on how the equity markets do over the next couple of months, it could be sooner than most people realize. Should we see another percentage increase from here in the markets, and since July witnessed the S&P 500 increase 1.9% in the month alone, an average balance of $100k could be as soon as Q3 2017.

Millennials and Retirement

Although millennials (for this purpose classified as those in their twenties) have relatively low balances, they are increasing both their balances and contribution rates the most among all other age groups. People in their twenties realized an 8.1% increase in their average 401(k) balance since the beginning of the year. People in their forties had the second highest increase in average balance, increasing 7% since the beginning of the year. Those not realizing large gains? People in their sixties, who witnessed just a 5.4% increase in balances since the beginning of the year. This should come as no surprise, however, since as people age they should be moving from risky assets into more conservative assets. As mentioned before, millennials have also increased their contribution rate the most among the five groups listed, increasing contribution percentages .13% since the beginning of the year. Although this may seem miniscule, if this amount is contributed each year until retirement, it could snowball into $16,000. Who said millennials don’t care about their retirement? The data is beginning to show otherwise.

Clearly people of all ages are taking their retirement more seriously than in the past. All five age groups listed above increased their contribution percentages since the beginning of the year. With Social Security likely not able to provide the safety net that people had hoped for, along with a rapidly declining number of companies offering a true pension, it’s more important than ever that people take responsibility for their futures. Financial institutions have done a marvelous job at scaring people into saving more for retirement by instilling thoughts of a retirement that include moving back in with their children, giving up half of their hobbies, or showering only once a week to save money on water. Okay I made that last one up, but the other two are seen in various commercials for retirement. And although the ads may have scared some people into saving more (which is good), many people are still unprepared. The trends that have been developing over the past couple of years seem to be continuing. Workers along the coasts are saving the most for retirement, not just in nominal dollars, but also in contribution rates. The south is saving the least, most likely due to lower median wages in most of the states.

Average 401(k) Winners and Losers

Which states are the best and worst at saving for retirement? The top state, with the highest average 401(k) balance among people aged 20-69, is Connecticut, having an average 401(k) balance of $132,840. The next four states are New Jersey, Massachusetts, Alaska, and New York, with average 401(k) balances of $125,660, 118,680, $116,200, and $115,980, respectively. When the District of Columbia is allowed to participate, however, it becomes the top state or district. In Washington D.C. the average 401(k) balance is $134,900. It’s also worth pointing out that among people in their sixties in D.C. the average 401(k) balance is an astonishing $298,200. So, which states are struggling to keep up retirement savings with some of the northeastern states? Having the lowest average 401(k) balance is Mississippi, with an average balance of $61,360. The next four lowest balances include Arkansas, South Dakota, Nevada, and Alabama, with average 401(k) balances of $61,880, $65,240, $65,750, and $68,040, respectively. These figures are derived by taking the five age groups listed above and weighting them equally to arrive at an average for the state.

Below is the entire list of states, including D.C., along with the average 401(k) balance by age.

Average 401(k) Balance by State - Top 25 States
Average 401(k) Balance by State - Bottom 26 States

Other interesting items are noted below:

The state of Washington has the highest contribution rate among twenty-somethings, with an average 401(k) contribution rate of 8.92%. Because of this the state also has the highest average 401(k) balance in the country for people in their twenties at $16,600, even larger than the District of Columbia. In fact, Washington state also has the highest average contribution rate and 401(k) balance among people in their thirties as well. This age group contributes an average of 9.83% of their paycheck towards retirement and has accumulated an average balance of $56,400. Keep up the good work Washington!

Don't feel discouraged if you're not quite where you want to be in terms of retirement savings. Also, it's important to remember that the numbers here are merely averages, which are often skewed by very high balances. But with averages aside, want to know what you can do to increase your retirement savings? Consider the following:

  • Consider increasing your 401(k) contribution percentage annually – in fact, many companies offer this as an option within their retirement plan

  • Search for an employer that offers a more generous retirement match. In today’s thriving economy many employers are offering a match of over 4%.

  • Eat lunch out one less time per week – this could allow you to bump up your contribution amount by one percent.

  • Remember that every little bit helps. Anything you can do now, whether it’s a one dollar a week increase, or a one percent increase, will result in tremendous gains later on.


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