If you're in your 30s, retirement can still feel like something you don't have to start thinking about just yet. However, the sooner you start investing for retirement, the more time your money has to grow. Which is why if you've been automatically contributing a portion of your paychecks into a 401(k) account, you've already been taking very crucial steps to set yourself up for the future.
Select used information from Vanguard's 2021 How America Saves Survey to look at how much money the average American in their 30s has saved up in their 401(k) account. Here's what they found:
- Average 401(k) balance of ages 25–34: $33,272 (average); $13,265 (median)
- Average 401(k) balance of ages 35–44: $86,582 (average); $32,664 (median)
Knowing how other people stack up can help you figure out where you should be, but there aren't any hard-and-fast rules about how much money you should have in your 401(k) account at every age. That's because personal retirement goals will differ based on the type of lifestyle you want to have during retirement. So if your ideal retirement lifestyle is less costly than someone else's, it's okay to not have as much money invested as they do.
To figure out your ideal retirement lifestyle, you might consider factors like how often you'd like to travel, whether you'd like to stay in your current city or move to a lower cost of living area and what hobbies you'd like to take up.
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How to start saving for retirement
Your 401(k) account is one of the best ways to start saving for retirement especially if you are contributing enough to receive the full match from your employer. For example, if your employer matches contributions of at least 4% of your salary, you'll need to contribute at least 4% of each paycheck to your 401(k) in order to receive the match.
You can contribute up to $20,500 to your 401(k) account for 2022 (the contribution limit adjusts each year). For most people, it's difficult to contribute enough of their paycheck to reach that $20,500 limit, so if you're currently contributing up to your employer match amount, you're already making solid progress.
But that doesn't mean you can only save $20,500 a year for retirement. You can actually invest an additional $6,000 a year by opening up a traditional IRA or Roth IRA.
A Roth IRA is a powerful and highly-recommended tool you can use when it comes to saving for retirement since you can contribute after-tax money that gets invested, grows tax-free over time and can be withdrawn without paying taxes. The longer your time horizon, the more your money can grow.
There are lots of Roth IRA providers out there, like Fidelity and Charles Schwab.
Fidelity Investments
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go account, but minimum $10 balance for robo-advisor to start investing. Minimum $25,000 balance for Fidelity Personalized Planning & Advice
Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go is free for balances under $10,000 (after, $3 per month for balances between $10,000 and $49,999; 0.35% for balances over $50,000). Fidelity Personalized Planning & Advice has a 0.50% advisory fee
Bonus
Find special offers here
Investment vehicles
Robo-advisor: Fidelity Go® and Fidelity® Personalized Planning & Advice IRA: Fidelity Investments Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®
Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
Terms apply.
Charles Schwab
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
Fees
Fees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
Bonus
None
Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™ and Schwab Organization Account
Investment options
Stocks, bonds, mutual funds, CDs and ETFs
Educational resources
Extensive retirement planning tools
Terms apply.
If you want a hands-off approach, look into one such as Betterment or Wealthfront, since they're robo-advisors can pick the portfolio that's right for you and automatically adjust your allocation based on your needs and risk tolerance.
Betterment
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn't require clients to maintain a minimum investment account balance, but there is a ACH deposit minimum of $10. Premium Investing requires a $100,000 minimum balance.
Fees
Fees may vary depending on the investment vehicle selected. For Betterment Digital Investing, 0.25% of your fund balance as an annual account fee; Premium Investing has a 0.40% annual fee
Bonus
Up to $5,000 managed free for a year with a qualifying deposit within 45 days of signup. Valid only for new individual investment accounts with Betterment LLC
Investment vehicles
Robo-advisor: Betterment Digital Investing IRA: Betterment Traditional, Roth and SEP IRAs 401(k): Betterment 401(k) for employers
Investment options
Stocks, bonds, ETFs and cash
Educational resources
Betterment offers retirement and other education materials
Terms apply. Does not apply to crypto asset portfolios.
Wealthfront
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts
Fees
Fees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront annual management advisory fee is 0.25% of your account balance
Bonus
None
Investment vehicles
Investment options
Stocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocks
Educational resources
Offers free financial planning for college planning, retirement and homebuying
Terms apply.
If you're able to max out both your 401(k) account and your Roth IRA, that means you're investing $26,500 per year for retirement — but there's still yet another opportunity for you to save even more. You can also contribute to taxable brokerage accounts.
These accounts don't have the same tax benefits that retirement accounts do (you'll pay taxes any time you sell your assets and make a withdrawal). But taxable brokerage accounts can still be an important part of your retirement withdrawal strategy. Plus, there is no limit to how much you can invest through these accounts.
There are lots of brokerage account options out there but Select ranked Robinhood as the best app for active investing and Acorns as the best option for micro-investing. Acorns allows users to micro-invest using the Acorns' Round-Ups® feature, which takes users' spare change and puts it into ETFs. Users link their credit or debit card account to their Acorns account, and when purchases are made, the app will round up the costs to the nearest dollar and then invest that difference.
According to Acorns' website, the average user invests more than $30 per month through the Round-Ups feature. And keep in mind that you're investing money just by making purchases that you would make anyway.
Robinhood
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum required to open an account or to start investing
Fees
Fees may vary depending on the investment vehicle selected. Commission-free trading; regulatory transaction fees and trading activity fees may apply
Bonus
Robinhood will add 1 share of free stock to your brokerage account when you link your bank account and fulfill the conditions in your promotion (you'll be able to keep the stock or sell it after 2 trading days)
Investment vehicles
Brokerage account: Robinhood Financial commission-free investing
Investment options
Stocks, ETFs, options trading, fractional shares, IPOs, plus certain cryptocurrencies through Robinhood Crypto (depending on where you live)
Educational resources
"Investing basics" blog, an online library of content and Robinhood Snacks daily newsletter
Terms apply.
Acorns
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum required to open an account, $5 minimum to start investing
Fees
Fees may vary depending on the investment vehicle selected. Monthly plans include: Personal ($3 per month) and Family ($5 per month)
Bonus
None
Investment vehicles
Robo-advisor: Acorns Invest IRA: Acorns Later includes Traditional, Roth, SEP IRAs, 401(k) Rollover Investment accounts for kids: Acorns Early
Investment options
Diversified ETFs which include more than 7,000 stocks & bonds
Educational resources
"Money Basics" blog and Grow + CNBC website
Terms apply.
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Disclosure: NBCUniversal and Comcast are investors in Acorns.
