New Survey: See How Your Retirement Savings Compare to Other People Your Age

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Are you saving enough for retirement? Sometimes it's easy to feel like you're behind on retirement savings. But if you use a 401(k) plan and get an employer match at work, you might be doing better than you think.

Vanguard, one of the biggest brokerages and investment firms, recently announced its annual retirement survey, How America Saves 2024 , with data about Vanguard 401(k) plans and other defined contribution plans. This survey is a great snapshot of how people are saving for retirement -- and how to save and invest "the right amount" for a comfortable future.

Let's look at how much people are saving for retirement by age group and how you can boost your investment accounts even more.

Average retirement savings by age group

As people get older, they tend to have more money in retirement savings. This happens for a few reasons: People tend to make more money (and save more money) as they get older and progress in their careers, and older people's retirement savings have had more time to grow with stock market earnings.

Vanguard's survey, How America Saves 2024 , shows the average retirement savings by age group, and the median ("typical") retirement savings by age group. These numbers are based on the account balances in Vanguard defined contribution retirement plans, such as 401(k) accounts:

It's worth looking at the difference between "average retirement savings" and "median retirement savings." Vanguard's survey says that the average numbers are higher because some wealthier people have a lot more money saved for retirement: "Average balances are indicative of participants at about the 75th percentile -- that is, about 75% of all participants had balances below the average, and 25% had balances above."

If you have the average retirement savings for your age group (such as $91,281 for someone age 40), your retirement savings are actually well above average. Vanguard's survey says that people who have the average retirement savings for each age group tend to be more affluent, older, or have spent more time in their job (and more years contributing to retirement accounts ).

The median amount of retirement savings is mathematically more accurate as a reflection of the typical retirement saver: Half of all Vanguard retirement accounts in this survey had balances lower than the median, and half had balances above the median amount.

Increase your retirement savings at any age

The Vanguard report has some interesting insights into the nitty-gritty details of retirement savings -- including the average retirement contributions, who's maxing out their 401(k), and more. All of us can learn how to save more for retirement based on Vanguard customers' real-life experiences.

Here are a few tips to boost your retirement savings.

Get your employer 401(k) match

The average Vanguard customer contributed about 7.4% of their income to 401(k) plans or other defined contribution retirement accounts in 2023. But the average total contribution rate (including employees and employers) was 11.7%. Vanguard recommends a total contribution rate of 12% to 15%.

The lesson is clear: Get your employer 401(k) match. If your company matches 50% of the first 5% of your salary that you put into your 401(k), this can boost your retirement savings by 2.5% of your salary. It's the easiest way to supercharge your retirement savings, and you're entitled to it as part of your job compensation. Don't leave free money on the table.

Increase your 401(k) contribution rate

Forty-three percent of Vanguard retirement customers increased their retirement savings contribution rates in 2023. Some 401(k) plans let you automatically increase your retirement savings percentage each year, or you can manually adjust the percentage of your salary that goes to retirement. Increasing your contribution rate over time is a great way to save more and potentially get a tax break -- especially if you just got a big raise at work.

Consider maxing out your 401(k)

People with higher incomes who can afford to do so should consider making the maximum contribution to their 401(k). Vanguard's report shows that 14% of retirement savers maxed out their 401(k) in 2023 with $22,500 of 401(k) contributions, or $30,000 for people aged 50 and over). Fifty-three percent of Vanguard customers with incomes of $150,000 or more made maximum 401(k) contributions in 2023.

If you're a high earner and you're in a higher tax bracket, contributing the maximum amount to your 401(k) could be a savvy tax strategy. The maximum 401(k) contribution limit for 2024 is $23,000, or $30,500 for people aged 50 and over who use "catchup contributions."

Bottom line

If you're passionate about saving for retirement, the Vanguard How America Saves 2024 report is worth reading. If your retirement account balance is lower than the national average for people your age, try not to feel bad or like you're behind. You have the power to make proactive moves to save more money, buy stocks, and watch your investments grow until retirement age.

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