Average 401(k) balance for 65 and older is $272,588. median $88,488.

[Dave Hess]

Older folks can have a substantial amount saved for retirement if they were wise and made the contributions over their working career(s).

I’ve contributed to my 401K for 35 years….. I also get a pension and voluntary pension at work.
IRA has also grown very nicely.

I encourage younger people to contribute to a 401K even if it’s only 3% of their gross pay.
At work I convinced a few coworkers to open Roth IRAs for themselves and their wife.

 

[Dave Hess]

The richest Americans own the vast majority of the market. The numbers are something like the wealthiest 10% own more then 90%.
The rest is dominated by 401K and such; people do not even know what their accounts contain.

The richest Americans are mostly over the age of 50.

 

[eljefino]

I wonder what their Roth balances are like .

Exactly, there are other similar retirement options that could capture slightly to substantially different slices of the working population. IRAs, 403(b)s, TSPs, defined benefit pensions...

 

[wpod]

The richest Americans are mostly over the age of 50.

We must figure out why !

 

[99Saturn]

I thought the number would be lower.

Hard to gauge as many other have said since there are other options out there. For example, every time i have left an employer I have rolled from my 401K to an IRA, so that would skew the number for me.

 

[SC Maintenance]

I thought the number would be lower.

Hard to gauge as many other have said since there are other options out there. For example, every time i have left an employer I have rolled from my 401K to an IRA, so that would skew the number for me.

A significant number of people cash out there 401K if they leave, pay the penalty, spend the cash. Yes it sounds crazy and it is. This is one study. Hopefully its gotten better.

"Shockingly, 41.4% of employees cashed out 401(k) savings on the way out the door. Equally surprising was that 85% of those who did cash out drained the entire balance."

https://hbr.org/2023/03/too-many-employees-cash-out-their-401ks-when-leaving-a-job

 

[SC Maintenance]

My living situation is unique which allows me to contribute this amount.

This is why I was surprised by the number. If you told me young people have nothing, I would get it - yolo, lack of knowledge, etc.

When you hit 50 and the kids are gone, and you have nothing - you think those people would panic, get 2nd jobs, save every penny. Still, $88K median at 65. Realize that means they likely only had $50K or less saved 5 years ago.

 

[99Saturn]

A significant number of people cash out there 401K if they leave, pay the penalty, spend the cash. Yes it sounds crazy and it is. This is one study. Hopefully its gotten better.

"Shockingly, 41.4% of employees cashed out 401(k) savings on the way out the door. Equally surprising was that 85% of those who did cash out drained the entire balance."

https://hbr.org/2023/03/too-many-employees-cash-out-their-401ks-when-leaving-a-job

Honestly, I can't say I'm all that shocked by that. If the balances (snapshot below of the lowest levels) in the article in your OP are real, I mean, not a lot of $ consequence in cashing out - and I would venture a guess job hopping skews to a younger population:

Age Group	Average 401(k) Balance	Median 401(k) Balance
Younger than 25	$7,351	$2,816
25 to 34	$37,557	$14,933

Don't get me wrong I agree many have a savings problem, just saying some stuff skews the statistic. Couple of examples:
- My wife is on a break from the workforce, so assuming if she stays out of the workforce (if she still had a 401k) her number would look lower because she is just getting the growth not a contribution, or if she had only done a partial rollover when she left her employer her balance would be artificially low.
- Wife's first company out of college didn't offer a 401k so her savings were depressed if you only looked at her 401k balance.

 

[brandon9715]

And I feel like $40k in mine at 33 is low… Wow.

 

[svtrit]

Ouch.

Other day i was at Schucks getting a water pump for a truck and another customer was talking about on her next check having the money to pay for some tramp stamp tattoo.
And I'm pretty sure this wasn't "extra" money after putting a good portion into savings, but "extra" after the bare minimum payments made... maybe not even that.

Just made me wonder why someone would pick a tattoo over barely not living under a bridge in 30 years.

A person at our plant gripes about having no money yet drives a lifted Silverado that gets 10 mpg on a good day, and then sits and vapes in it during breaks while idling it, after running to the gas station to buy lunch.

Changing that daily activity alone could cut $70/week from the budget.

We keep telling her to trade the truck on an older Toyota or a Honda. She won’t listen.

She’s late 20’s and has nothing saved. Lives check to check.

 

[Nessism1]

Personally the cost of healthcare between retirement and medicare scares me more than not having enough in my 401K.

I'm going to have to purchase insurance for about 1.5 years between retirement and Medicare. I'm figuring on $1k/month. Hope this is close, anyway. Not too horrible.

 

[SubieRubyRoo]

Well, it beats a foxhole in Ukraine.

New 401k 'Super Catch-Up' Contribution Available In 2025​

The new twist affects those who will be between 60 and 63 years old in 2025 and subsequent years. They're now granted the power to make "super catch-up contributions." Specifically, that means they can pour $34,750 into their workplace retirement plans in 2025 -- $4,250 more than their total for 2024. You qualify for this break by turning one of those qualifying ages anytime during the year. For example, someone who turns 60 in November can make the full super catch-up contribution for that year.

Click to read source

That’s kind of a slap in the face… if people 60-63 had $35k available income for “super catch-up”, they probably wouldn’t need a super catchup-up because they would have already been investing.

And, why are people handcuffed /handicapped on what amount they can put into their retirement, if the goal is for them to be self-sufficient after their work lives?

Or, why not take the SSDI contributions from employer and payroll theft taxes and put those into the 401k accounts? Imagine what your own retirement account would have looked like if you had had 15% minimum contributions over your entire working life?

 

[Dave Hess]

IRAs should have a $50K yearly contribution limit
401K / 403B should have a $80K yearly contribution limit

 

[99Saturn]

That’s kind of a slap in the face… if people 60-63 had $35k available income for “super catch-up”, they probably wouldn’t need a super catchup-up because they would have already been investing.

And, why are people handcuffed /handicapped on what amount they can put into their retirement, if the goal is for them to be self-sufficient after their work lives?

Or, why not take the SSDI contributions from employer and payroll theft taxes and put those into the 401k accounts? Imagine what your own retirement account would have looked like if you had had 15% minimum contributions over your entire working life?

How are people handcuffed? Nothing stops people from saving beyond a tax advantaged account limit.

 

[blkwtr]

This is a very misleading article. Many people are changing jobs for various reasons and have a number of 401K's. Also many people have a substantial amount of their retirement funds in IRA's and brokerage accounts. Also, many people open and contribute to accounts for their non-working or part-time wotking spouses. So, you have to add all this together to determine what has been saved by any one retiree.

 

[Mechanician]

Personal Finance should be a mandatory class for all seniors in High school, everywhere.
It's a "real world" subject, that would benefit everyone in their years to come.

 

[eljefino]

That’s kind of a slap in the face… if people 60-63 had $35k available income for “super catch-up”, they probably wouldn’t need a super catchup-up because they would have already been investing.

And, why are people handcuffed /handicapped on what amount they can put into their retirement, if the goal is for them to be self-sufficient after their work lives?

There are limits on 401(k) plans so the rich guys owning the company can't put half a million in every year, tax deferred. It's actually a "good" thing. There are also carrots and sticks regarding allowing participation by the plebians so the rich guys can get what they get out of the deal.

 

[Sequoiasoon]

Those numbers make me feel better as a comparison but still not enough in my mind and I'm well north of those #'s.

I had the advantage of dad giving advice when I started work that had a 401k, 34 years ago. He said put in what you can even if it hurts and NEVER go below what the company match is. That used to be 50 cents on first 4% and over time went to 7%. Best, no, but an extra 3.5%. He said first 100k is the hard part and after that compounding adds quickly. He also said go aggressive, S&P and Fidelity Growth and maybe play with small amounts on others but make those most of it. Years later we had the option as they added Roth 401k, we could transfer but had to the pay taxes on the lump. I couldn't squeeze that but did make all future contributions as Roth 401k since then. He also said each raise add 1% so your 3% raise is 2 to you now and 1 for future you.

I have a pension that the company puts a lump sum in yearly of 5% of salary and gives 4% interest on what was there. That can be taken as a lump sum when I leave or as pension/annuity payments for rest of life and for a slightly reduced monthly payment, my wife gets that same amount until passing. If just to me, she would get nothing from pension if I didn't make it past day 2 of retirement so I'll take reduced to cover her. They used to cover secondary medical if payments but that seems to be changing so might need to revisit that in 6.5 years and maybe just invest lump sum.

My company no longer does pension for new employees as of about 8 years ago. They do automatically put you into 401k (at 1%) with a higher match amount. It is also set to auto increase 1% each year. You have to opt OUT from that if you don't want to contribute. They start you in a "balanced smart money type age related fund". More aggressive when younger, more safe as older. The ones I saw are not doing bad but not S&P returns.

I gave dads advice to many co-workers and employees over the years. They all thank me for making them do that and look at yearly. I make it part of my annual merit review with them to consider adding 1% at least if possible.

Conversations with a late 20's co-worker the other day I had given that advice a couple years ago and something turned to 401k. The girl at table behind me I didn't see originally swings around and says listen to him, trust me. She used to work for me as an hourly employee in later '90's. She was a mid 20's divorced/single mom then, working every OT possible. She said she took that initial hard hit, adjusted her wasted expenses some and did the company match in more aggressive. She has upped it 1% most years and currently puts 22% away. I was proud/happy when she said if not for me she probably would have nothing saved as she had no financial advice from parents or anyone prior. Original guy conversation eyes opened some when she said in '08 she lost on paper/value over $100k but staying with it, not moving or panicking as I said has put the value way past that on recovery.

Education as all say is huge and seriously lacking. Information is easily there these days but you need to use it.

 

[99Saturn]

There are limits on 401(k) plans so the rich guys owning the company can't put half a million in every year, tax deferred. It's actually a "good" thing. There are also carrots and sticks regarding allowing participation by the plebians so the rich guys can get what they get out of the deal.

I agree. I have posed this question before when these discussions come up around higher contribution limits - why? People should do the math on maxing out contributions on their IRA and 401k. It's substantial at retirement.

I get that people want to take advantage on a personal basis (I would too) of the savings but I am not sure who needs to save that much tax advantaged.

My employer allows for 401k contributions up to the 415(c) limits so capped at $69K/year for combined employee and employer contribution. $69k annually tax advantaged then compounded is a lot of money at retirement. Not even including other accounts like IRAs or HSAs.

 

[demarpaint]

My parents were responsible with credit and good savers, we learned from them. Simply put I don't buy things I can't afford, and I saved toward my retirement, it worked.