How Does Your Retirement Nest Egg Compare?

Here's an interesting set of facts from US News. It lists how much people at various ages have saved in their 401ks. It includes lots of great information such as the median account balance based on salary range, the average account balance based on job tenure, and the average asset allocation for five sets of people -- those in their 20s, 30s, 40s, 50s, and 60s.

I'm in my 40s, so I looked at those numbers. I have only been at my current job for five years and though I max out my 401k contributions, the account isn't nearly as big as it would be if I had been with the same company for 20 years. Of course I have a sizeable IRA, the recipient of a few 401ks that I've rolled into it through the years. That said, here's where I stand versus the averages:

• Based on my salary range, my current 401k is below the median balance (there's that time issue kicking in), but my total retirement savings (this 401k plus other 401ks I've rolled into IRAs) is well above the median -- even with the recent beating these accounts have taken.

• For job tenure, my current balance is way, way over the average. The 2-5 year average is just over $31k and I've already said I max out my 401k every year, so it's evident that I'm out-pacing the averages here.

• 54% of 401k investments are in equity funds. I have 100% in equities (an index equity fund to be exact.) My total asset allocation is spread out among various types of investments in various accounts, but my 401k is all in equities.

It's interesting to me that the numbers for the 50s and 60s group aren't that much larger than the 40s group. Does this mean that people in their 50s and 60s today have been bad savers? Or maybe something happens in their 50s and 60s that slows down savings? You'd think that simply the growth of the money people had in their 40s would be higher than what is showing in the 50s and 60s group.

The numbers are interesting to me as I love "averages" and "median" numbers dealing with personal finance. If you like the same, you'll want to check out the US News piece. And if you get the chance, stop back and tell us all how you stack up against these numbers! I'm betting most FMF readers are well ahead of the pack. ;-)

Comments

[Jim]

401k's started in 1980 and they weren't quite as popular originally. So I bet the lower numbers for people in their 50's and 60's is at least partially due to those people not having access to 401k's or that 401k's were not as widespread or popular for the first 10 or so years of their working lives. Plus I bet more people in their 50's and 60's had a traditional pension so they'd have money there and wouldn't need to put it into a 401k. But as time goes on traditional pensions have died off so younger people don't have more of their retirement dependent on the 401k's.

Jim

[Matt]

This article was posted 16 months ago.....I'm guessing you can subtract a substantial amount from each of those "typical" balances.

[FMF]

Matt --

So it is. They must have re-run it recently since I got it from my feedreader.

[JimL]

With the drop in the market, I am right around the median number for my age and income level. I am leaving my 401k invested mainly in stocks as I have 25 years to go yet until retirement. However, for retirement savings outside the 401k, I have been putting money mostly into CD's, etc. Either way, I think I will be in good shape.

[rwh]

I agree with Jim. I'm 51 and didn't have access to 401k type of investment until I was 32. My first 10 years or so of full time employment after college I had a couple of jobs that put money in a profit sharing account that worked like a 401k. But there was no opportunity to add to it on a pre-tax basis, and in both cases I had to work there at least 10 years to be fully vested. I held each job for less than 10 years so when I quit I had to forfeit about half the value. The rest I rolled into IRAs.

Thankfully my mom (bless her dear, departed soul) talked me into starting an IRA in 1981. My IRA and 403b balances as of 16 months ago were both above the median for my age group and income level. My wife's were too. My guess is they still are.

I'm in a balanced portfolio (60/40). The last time I reviewed it was at the end of the 3rd quarter in 2008 and was at 53% stocks, primarily due to the falling market in September. I'm sure the 4th quarter didn't help things. But I will continue my 60/40 allocation.

"It's interesting to me that the numbers for the 50s and 60s group aren't that much larger than the 40s group."

Probably more a sign of how these numbers aren't very informative. Total retirement savings can be very different than someone's 401K balance. Given how much people move around now, a lot of people in their 50s and 60s have probably only been at their current job a little longer, on average, than everyone else, and many of them probably have very large IRAs full of previous 401ks.

My 401k is only 10% of my overall retirement savings (both taxable & untaxable), given the fact our company hasn't had a 401k for very long and my status as an HCE limits my contributions to a much reduced amount. Given all these factors, I'm very impressed at how high the numbers in the survey are.

[Valerie]

I am within $200 of the average account balance for my age and tenure, but I noted that my 401(k) took a hit of about 20% in the last year.

[DCS]

Don't forget that the 50+ age cohort starts to dig into the age group that often had pensions instead of 401k accounts. My parents couldn't pinch pennies if you glued them to their thumbs. They have nothing in tax-deferred retirement accounts and little other savings, but if you figure out how much they would have had to spend on an annuity to provide the same income-for-life as Dad's pension, they're millionaires.

[Craig]

Good article. Being I am new and haven't contributed as much as I would have liked I am below the medium range for my age and salary. Hopefully that will grow over time as I can budget better and put more emphasis on my IRA account.

[rdub98]

If my k hadn't taken a 33% hit last year, I would be above the median account balance for my salary range, and WAY above for job tenure. Before the market tanked, I was in really good shape. However, I maxxed out my 401k this year for the first time and I'm hoping that dollar cost averaging coupled with a 2009 market boom will save my butt. I'm about to turn 40, so I'm really close to going into another age group. I still have 26 years left to work (providing I decide to retire at 65 - which I probably will not).

[Jeff]

Thanks for sharing this article. If I consider the salaries of my wife and myself and our IRAs in addition to our 401Ks, then we're well above the account averages for salary range and job tenure. I'm in my 40s and have ~80% in equities, perhaps a little aggressive if you adhere to the guideline of having your bond percentage investment equal to your age.

[SUSAN FROM LI]

I moved a stack of my retirement money into a fixed annuity last year before the bottom fell out. Thankfully, that has proven to be a wise investment.

The other 50% of my money has dropped by about 35%.

I've been at my current job for 2 years, but only able to participate in the 401k for 1 year, so I came in "under" for that number, but otherwise I'm way over (for my age, and my salary range).

So I'm happy.

[Krazy Eyes]

How useful is it to just compare 401ks? I would think it would be much more informative to compare total retirement savings.

I've job-hopped a bunch over the last decade and as a result both my tenure and current 401k are well below the average for someone in their 30's. I've rolled all my past 401ks into an individual IRA and if you add everything together I'm about 2x the average for my pay scale. This doesn't even account for other investment vehicles I've got.

[poor boomer]

I always approach such sets of facts with avid enthusiasm - I want to devour as much of this stuff as I can.

But invariably I end up sorely disappointed: the numbers offered NEVER relate to workers at the bottom of the economy.

It's no accident that US News didn't offer any numbers for workers earning under $20K.

What happens to these bottom-rung workers when they can no longer work?

Sorry for the duplicate comment, when I tried to Post, it hung until producing an error message (something about a Zero Sized Reply, whatever that is) so I assumed it didn't actually post, and tried again.

[MasterPo]

401k account value is misleading as you eluded too.

I never roll a 401k from one employer to another. I always put it into a rollover IRA.

So I'm like you in that going purely by my 401k balance I'm very low. But when you include my IRA's I'm doing better.

[poor boomer]

Some people elude to facts naturally.

[Sam]

The state of 401k savings is simply shocking! I hope future generations learn from these mistakes and protect themselves much better. I'm going to check out US News, thanks for the tip.

[JE Gonzalez]

The only thing I know is that 401k sounds good but can crash down. Hell, many old-timers go back to work because of faulty 401k's. My plan: get a good bundle of wealth from real estate, good investment, and career that will be greater than or equal to my 401k. Hard? If you want it to be? Doable? Have to find out for myself, my parents did, but my grandparents on my mom's side was not so lucky.

[thomas]

My egg is small and fragile!

[MasterPo]

Sam - Why bother savings? The government will guarantee you retirement. Just as Al Franken.

There are so many more important things to spend your money on than save for retirement like xbox and itunes...

[Big Cheese]

I've been unable to participate in the 401(k) since I moved overseas to work in 2006. You know what- I don't miss it much at all.

Reason: I'm in my mid-30's and truly believe that by the time I'm pulling out money accumulated in the 401K, my variable tax rate will be HIGHER than it is today.

Also I'm sickened by the fact that the gov't uses the stock market swoon and ensuing drop of all the 401k's to draft legislature to bail out companies deemed to be too big to fail. the mass 401k's are holding the gov't hostage to short term swings in the stock market, which are then used to drive major shifts in public policy. A huge mistake, and one that is likely to cause dire implications for our economy!!!

-BC