The Average 401k Balance by Age

Foto de Morgan Housel en Unsplash

If you’re curious how you stack up to everyone else, it helps to look at the average 401k balance by age. But if you want to know if you’re on track to never have to work again, you might need to compare yourself to a stricter standard. As we’re about to see, the typical person’s 401k balance leaves much to be desired.

Here’s the average 401k balance by age according to the most recent annual study from the investment firm Vanguard:

Image source: Author’s image | Data Source: How America Saves 2022 from Vanguard

There’s a few things we need to keep in mind as we break this down.

There’s No Such Thing As an Average Person

I know statistics are boring, but we need a basic refresher of the first week of Stats 101:

• Median: A number where half the observations are higher, and half are lower
• Mean (or average): Add up all the observations, divide by the number of observations
• In the normal distribution (a.k.a. “the bell curve”), the median and mean are the same

I bring this up because we often use “average” to mean “typical.” But that’s not what it means, and it doesn’t usually work when talking about…