The Average 401K Balance For Americans Under 30 Is Very, Very Low

young woman holding money taking a selfie

When you’re in your 20s, the last thing you want to think about is investing money that you likely won’t touch for 40-plus years. But here’s the harsh truth: that is EXACTLY the thing that you should be thinking about. Because the earlier you start, the longer you get to take advantage of all the sweet, sweet compounding. So then why, I ask, is the average 401K balance and retirement savings for Americans under 30 so incredibly low?

We’ve mentioned this before, but, it bears repeating…

What Experts Suggests You Should Have In Retirement Savings By Age:

  • 30: 1x annual salary
  • 40: 2x annual salary
  • 50: 4x annual salary
  • 60: 6X annual salary
  • 67: 8x annual salary

It is worth noting that these numbers are attainable by starting to contribute 15% of your annual income to your 401K (or other self-funded investment accounts) at age 25.

retirement accounts

So What Is The Average 401K Balance For Americans Under 30

According to Fidelity, the Average 401K balance for people aged between 20 and 29 years old was $15,000 as of the end of 2022.

That. Is. Low.

What Does This Mean?

For starters, we don’t think it means that the sky is falling or that people under 30 are in deep financial trouble.

Why don’t we think that? Simple.

This age range might work better from 30-39 or 40-49, but most people haven’t even graduated college by age 20. And, if they have and they are just starting to contribute. So of course their balance is going to drag the entire average down.

There is also the possibility that 20 to 29-year-olds are eschewing traditional retirement savings accounts to invest in cryptocurrencies or to simply have easier access to their money by investing it themselves using various online trading platforms.

If that is the case, they are obviously missing out on all the tax benefits of using a 401K — not to mention any employer match — but some lessons are best learned through experience. Even if that experience has a negative impact on your financial future.

C. James

C. James is the managing editor at Wealth Gang. He has a degree in finance and a passion for creating passive income streams and wealth management.