The average 401(k) balance reached a record $148,153 in 2024, according to data from investment management firm Vanguard. Averages can be skewed by a few high-net-worth investors, though— the median balance was a much more modest $38,176.
For people 40 to 44, the average was $103,552 and the median was $39,958. For workers 45 to 50, the average was 188,643 and the median rose to $67,796.
| Age group | Average balance | Median balance | Participation rate |
| Under 25 | $6,899 | $1,948 | 54% |
| 25–34 | $42,640 | $16,255 | 82% |
| 35–44 | $103,552 | $39,958 | 86% |
| 45–54 | $188,643 | $67,796 | 87% |
| 55–64 | $271,320 | $95,642 | 87% |
| 65+ | $299,442 | $95,425 | 79% |
401(k)s tend to grow as we mature and earn more, so it's not surprising that older employees have larger balances.
If you're in your 40s, it may be time to consider increasing your contributions and to prepare to start utilizing catch-up contributions in your 50s. That's especially true if you're aiming to retire early.
How much should you save for retirement?
According to the Federal Reserve, Americans of retirement age spent an average of $59,616 a year in 2025, or about $5,000 a month. Of course, your personal retirement goal will depend on your cost of living, health care needs, post-work plans and other factors.
Some experts recommend having at least 8–10 times your annual salary available to you upon retirement.
Another strategy is the 4% rule, which can help estimate how much you can withdraw from your investment portfolio annually without running out of money. According the rule, if you withdraw 4% of your total retirement savings in the first year of retirement, and then adjust the dollar amount annually for inflation, your money should last at least 30 years.
How to super-charge your 401(k) in your 40s
If you have access to a 401(k) or other employer-backed plan, here's how to take advantage of it to its fullest extent.
Max out your contributions
Experts suggest setting aside 10–15% of your gross income for your 401(k), including any employer match. If you don't begin contributing until your 40s, you may need to start at 20%.
If that's not feasible, even 3% to 5% is a good start: You can try increasing your contribution 1% every year.
The IRS sets annual limits on how much you can divert to a 401(k). For workers under 50 in 2026, that limit is $24,500.
Fully utilize your employer match
Most employers will match all or some of their employees' 401(k) contributions. It's about as close to free money as you can get.
Employer matching contributions don't count towards your personal 401(k) deferral limit, though they do count toward the overall 401(k) contribution limit, which is $72,000 in 2026 ($80,000 for workers 50+)
Employer contributions can be a dollar-to-dollar or a partial match—say, 50 cents for every dollar you set aside. Most companies cap how much they'll match: You might put 10% of your paycheck into your 401(k), for example, but your company only matches the first 5%.
Other ways to save for retirement
IRA: You contribute after-tax money with a Roth IRA, so you won't be taxed when you make withdrawals in retirement and are likely in a higher bracket. Plus, IRAs aren't tied to your employer, so you can keep contributing if you leave your company.
Annuities: An annuity can also provide guaranteed income for life, reassuring people who worry they'll outlive their retirement savings. Annuity sales have soared to a record $461 billion in 2025.
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Health Savings Account (HSA): Workers with a high-deductible medical plan can enroll in an HSA to defray medical and over-the-counter expenses. Contributions roll over indefinitely and, after 65, can be used for any reason without penalty.
Have you secured your family's financial future?
FAQ
What is a 401(k)?
A 401(k) is the most common employer-sponsored defined contribution retirement plan. Individuals decide how much of their paycheck to invest, with the funds growing tax-deferred. Often, the employer matches the contribution up to a stated limit.
When can you withdraw from a 401(k)?
In most cases, you can make withdrawals from a 401 (k) without penalty starting at age 59 1/2. There are exceptions, however, including for medical bills, the birth/adoption of a child, the purchase of a first home and financial hardship.
How much should I contribute to my 401(k)?
If you can, aim for 10–15% of your gross income, including an employer match. If you are opening a 401(k) later, in your 30s or 40s, you may need to shoot for closer to 20%. If your finances are tight, even contributing 3% is a good start — you can try to increase your contribution 1% every year.
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