Retirement planning has never been easy, but it's especially challenging for today's workers.
Most employers no longer offer pension plans, and Social Security is on shaky ground, with potential benefit cuts on the horizon . Most future retirees, then, will need to rely heavily or entirely on their savings. But with a cost-of-living crisis making it difficult to even make ends meet, saving for retirement can feel like an insurmountable goal.
Research shows that average workers across generations are struggling to save, but it's simpler than you might think to build a robust nest egg -- and potentially even reach $1 million or more.
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The average retirement account balance by age
Every year, Vanguard releases its How America Saves report to highlight where workers stand on their journey toward retirement. In its 2024 report, it provides a snapshot of Vanguard 401(k) balances across various age groups, providing insight into the average worker's savings.
In 2024, the average 401(k) balance among those age 65 and older is $272,588. Among those age 55 to 64, the average balance is $244,750. And those age 45 to 54 have an average balance of $168,646.
Perhaps more telling than the average balances, however, is the median balances. The averages may be skewed by extremely high earners with millions stashed away for retirement, which isn't necessarily representative of the average worker. The median balances can paint a more realistic picture of where most Americans stand with their savings.
| Age | Average 401(k) Balance | Median 401(k) Balance |
|---|
| 35 to 44 | $91,281 | $35,537 |
| 45 to 54 | $168,646 | $60,763 |
| 55 to 65 | $244,750 | $87,571 |
| 65 and older | $272,588 | $88,488 |
Data source: Vanguard. Table by author.
Considering the median 401(k) balance across all age groups -- even those closest to retirement age -- is under $100,000, it's clear that most Americans may be struggling to save. While tens of thousands of dollars is far better than nothing, if you don't have other substantial sources of income, you may risk running out of savings just a few short years into retirement.
The simplest way to strengthen your nest egg
There's no magic solution to building a million-dollar retirement fund overnight, and any investment that promises to make you rich quickly is too good to be true. But if you invest consistently and continue investing for as long as possible, you could earn more than you might think.
For example, say you already have $100,000 in savings, and your goal is to reach $1 million by retirement age. If you're earning a modest 8% average annual return on your investments, here's how much you'd need to invest each month, depending on how many years you have to save.
| Number of Years | Amount Invested Per Month | Total Savings |
|---|
| 20 | $1,000 | $1.015 million |
| 25 | $400 | $1.036 million |
| 30 | $0 | $1.006 million |
Data source: Author's calculations via investor.gov.
The more time you have to let your money grow, the easier it will be to reach your goals. In fact, if you have at least 30 years until retirement, you wouldn't need to invest anything per month -- simply let your initial $100,000 sit in your account untouched, and you could accumulate over $1 million with zero effort.
Also, keep in mind that you may not necessarily need $1 million to retire comfortably. While most retirees will likely need several hundred thousand dollars, your best bet is to calculate your individual needs so you know you're striving for the right goal.
Regardless of your goals or how much you can afford to save per month, time is your most valuable resource -- and every little bit counts. By investing whatever you can and giving your money as much time as possible to grow, you'll be far more prepared for retirement.
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