Experts claim that Americans in their 50s looking at retirement should have $212,400 in their 401(k) accounts on average, which is much more than the median average of $64,300, according to CNBC reports.
Financial experts from the financial planning company Charles Schwab found that the average American believes they should have $1.8 million stashed away in their 401(k), an employer-sponsored retirement tool that allows employees to contribute pre-tax income toward retirement.
However, data from Fidelity Investments found the numbers vary depending on the age range. For Americans in their 40s, the average is a little over $124,000, while the median is only $41,600 for a 401(K)—Americans in the 30-age bracket average over $56,000, with a median of under $23,000.
Lastly, Americans in their 20s fit in at $17,700 with a small median of $6,700 in a 401(K) account.
The numbers also depend on who has a 401(K) account as an AARP survey revealed that 20% of adults age 50 and over say they have no retirement savings. AARP’s senior vice president of research, Indira Venkateswaran, said the lack of savings is due to an increased cost of living.
“Everyday expenses continue to be the top barrier to saving more for retirement, and some older Americans say that they never expect to retire,” Venkateswaran says.
Another reason is the structure of retirement. Fidelity’s “2024 State of Retirement Planning” study found close to 60% of Americans plan to continue working, at least part-time, while in retirement. Retirement expert Anne Lester says that mindset is beneficial in two different ways: allowing retirees to save more and allowing the savings to last for a shorter time span.
“Doing that allows you to save more and your savings will need to last for a shorter amount of time because the years you spend in full retirement will be shorter,” Lester said.
“So, you’d actually need less money than you otherwise would.”
The expert also added being able to tap into Social Security benefits. The earliest Americans can start receiving Social Security benefits is 62, but contingent on when a person was born, they may be forced to wait until they reach the full retirement age to get 100% of the benefits.
The full retirement age for persons born after 1960 is 67. Lester says a delay is beneficial as the Social Security benefit increases by 8% each year a person waits to claim full retirement age and age 70.
“That’s sort of the triple benefit of waiting to retire,” she said. “You have longer to save, you have a smaller amount that you need to save and your Social Security income will be higher.”
According to Business Insider, people in their 50s approaching retirement should take advantage of catch-up contributions and maximize 401(K) savings. Experts say to finalize retirement goals, continue saving as much as possible, and avoid high-risk investments.