In a recent Vanguard study looking at the state of saving in America, called How America Saves 2021, I ran across this interesting chart. It shows how much people have saved in their 401k accounts for different age groups.
It’s often difficult for savers to be able to benchmark where they are at in their journey to retirement, so I thought I would share it here. One caveat that was pointed out to me is that many savers don’t stay in one job or with one 401k plan administrator their whole careers.
You can see that there is a big difference between the ‘average’ (mean) and ‘median’ savers. Too many people have little to no savings, so that pulls the median amounts way down.
Conversely, the average column is skewed upward on the strength of folks that save as much as they can. These are the amount someone on a journey to FIRE (financially independent & retired early) should strive to beat.
As I look at the history of our savings, we were off the charts in our 401k savings from the start. We both joined MegaCorp 401k plans when we were in our early 20s. We maxed them out from the beginning.
For most people, your 401k is your ‘base level’ of retirement savings. Fewer people have access to pensions these days so maxing out your 401k from the start is critical. How aggressive have you saved in your 401k?
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