The Average 401(k) Balance for Americans 45 to 54 May Surprise You

If saving for retirement were an easy thing, people would probably do more of it. But it's easy to see why retirement savings can fall by the wayside, especially nowadays.

Inflation and elevated interest rates are wreaking havoc on consumers. And with no end in sight, many working Americans today have no choice but to try to conserve funds for near-term expenses, letting their 401(k) contributions slide.

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But at some point, it's important to check in on your 401(k) and make sure you're happy with your savings balance. And a good time to do that is in your mid-40s to mid-50s.

When you're in your mid-40s, you're typically midway through your career. By then, hopefully you're earning a bit more money than you once were. And you may have an opportunity to ramp up your savings for that reason.

By your mid-50s, you're inching closer to retirement. You're not quite there yet, but it's time to get serious about savings if you're unhappy with your progress.

What the typical 45- to 54-year-old has saved in a 401(k)

Vanguard compiles data each year on 401(k) trends. And according to its most recent data, the average 401(k) plan balance among Americans age 45 to 54 is $168,646.

However, that doesn't tell the whole story. Vanguard also reports that the median 401(k) balance for that age group is $60,763. And when you have a median that's considerably smaller than the average, it tends to indicate that the median is a more representative figure on the whole.

But even if we go back to the average balance of $168,646, it frankly doesn't paint the most settling picture -- especially for savers in the higher end of that age range. Someone who's 54 years old may only have about another decade to boost their savings, which isn't no time, but it's also not a lot of time.

How to catch up on savings if you need to

As a general rule, you should aim for enough retirement income to replace about 70% to 80% of your former paycheck. This doesn't mean you can't get by on less if you're willing to live frugally. It's just general guidance. But following it could set the stage for a more comfortable retirement.

Meanwhile, the typical Social Security recipient today collects about $1,979 a month, or roughly $24,000 a year. You can get an estimate of your future Social Security benefit by creating an account at SSA.gov and accessing your most recent earnings statement.

From there, you can do the math to see what 401(k) balance to aim for based on whatever withdrawal rate you land on. For years, experts recommended 4%. That guidance fell out of favor for a while, but it may be reasonably applicable in today's interest rate environment.

If you determine that you'll need $48,000 a year to live comfortably in retirement, and you'll get half that amount from Social Security, it means you might need another $24,000 a year from your 401(k). A 4% withdrawal rate requires a balance of $600,000.

Not yet there? Don't panic. If you're 50 or older, you can make catch-up contributions to your 401(k). You can also try switching jobs if your employer doesn't offer much in the way of a 401(k) match.

And don't forget the gig economy. Boosting your income with a side job is a great way to sneak more money into your 401(k) at a time when there's room to benefit from stock market gains.

You may be surprised to see what the average 401(k) balance is today among workers aged 45 to 54. But remember, the amount of money you end up needing for retirement depends on you and you alone.

So even if you're ahead of your peers in the context of 401(k) savings, you may still have work to do. And if you're behind, you don't necessarily have to panic -- especially if you're willing to make changes that allow you to catch up.

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