Average 401(k) Balance by Age (2026 Edition)

[00:03] show we're breaking it down by age. >> Brent, I am so excited because today we're going to take a look at one of America's favorite accounts, the 401K much Americans actually have saved in these wealth-building machines.

[00:16] >> So I'm Brent, he's Bo and we're financial advisors here to give you the 411 on 401K's. With that, let's dive right in.

[00:29] >> Yeah, if you've watched any of our content for any amount of time, you know that we absolutely love 401K accounts. They're one of the most powerful tools in your wealth-building arsenal and most millionaires when they hit that

[00:43] seven-figure status, when they hit the two-comma club, it often happens inside >> I think it's important to understand this is not all fluff. We need to know this is not all fluff. We need to know why we absolutely love 401K's. Look,

[00:55] that are going for this including these things are tax advantaged. So if you money in, you're using the Roth that grows completely tax-free. How about that? If you're using traditional, you get a tax deduction right now and then

[01:10] it grows tax-deferred. This is powerful. >> Yeah, the second mathematical advantage is that there is an employer match often times. You get free free money. That's employer is willing to put in. So there are obviously mathematical reasons why

[01:24] we love 401K's but there are also behavioral reasons why we love 401K's. automatic for the people meaning if you're trying to set it and forget it and just make the easy habits, the good habits as easy as possible, this is

[01:37] >> Yeah, one of the ways that they work is you get to pay yourself first. You just company, "Hey, every paycheck I want X dollars or X percent of my pay to go into my 401K before it ever even hits my account." It's a really good way to set

[01:52] >> you're looking for a way to kind of have a shock absorber for volatility. We love that 401ks make it kind of buy and hold. get in there and do emotional trading because you're just kind of staying the

[02:07] course since you can't touch these assets for decades in the future. It really can be a counterweight to all the emotional stuff and I love that it's volatility. >> I love what you said. If you can let it

[02:20] work for decades because the earlier you figure this out, the more powerful it before. The younger that you can start saving, the younger you can start investing, the less work you actually have to do. If a 20-year-old starts

[02:33] saving and they save $95 per month every month for their entire working career, by the time that they get to age 65, they will have a million dollars saved up. But do you recognize that of that million dollars, 95%

[02:47] of it is growth. 95% of it was the money working harder than the 20-year-old had say, "Wait a minute. Nobody is doing this when they're 20 years old." I if you had started saving investing at 20. But you know, there's always

[03:01] exceptions. Bo's always the exception. But But look at this. Seriously, if you're listening to the podcast version of this, for a 30-year-old, 89% of your account has the opportunity to be the growth. For a 40-year-old, 77% of the

[03:15] growth. Even for somebody my age in their 50s, 55% of your account still has the opportunity to be the growth, not just your contributions. >> Okay, but if it's such a powerful tool, the question then becomes, "Okay, well,

[03:29] how do I make the most of it? What do I invest in? How much should I have saved question is, "What's everyone else doing? How does everyone else's 401k look?" And that's exactly what we want to unpack for you

[03:44] today. But maybe you're sitting there and you're thinking, "Oh guys, gosh, I'm just going to turn this one off. I don't have access to a 401k." That's okay. be applied across all of your financial accounts cuz maybe you're someone out

[03:57] there that you have access to something like a 403b or a 457 or maybe you're a Thrift Savings Plan or maybe you're just an entrepreneur who's able to fund and put money in a solo 401k. Even if one of these describes you, listen up cuz

[04:14] >> Yeah, I I I want to make sure everybody knows a lot of the behaviors and a lot advantages and other things, they can appeal to these other accounts, too. So, lean in. Let's go ahead and figure out how do we maximize this golden

[04:29] the future. >> So, let's start at the very beginning, Brian. Let's start with folks in their 20s. And every year we do this research and we know that right now, if we just look at average 401k balance by age for

[04:42] those in their 20s, the average 401k for a 20-year-old who actually has a 401k is about $5,000. The average 401k balance for a 25-year-old is just a touch under $18,000. And the average 401k for

[04:58] someone who is 30 years old in this country right now is just over $37,100. the question of how much you need, we've kind of we'll we'll back into that math.

[05:10] But, I think it's important to say this show is going to be focused on 401ks and memo that this is a big part of the wealth building journey. So much so that wealth building journey. So much so that 57% of Americans that this is where they

[05:23] don't report having any money outside of 401ks, meaning that if your employer didn't have a plan, you have absolutely nothing going on. I'm here to tell you lot of the heavy lifting, but you're going to need more. You're going to need

[05:35] the Roth IRAs. You're going into be saving in after-tax accounts. We want you to be thinking big picture on the money you need for the future. with you average 401k balances of your peers, when it comes to how much you

[05:48] have saved, we want you thinking about your entire portfolio. And so, one of is, "Okay, well, how much do I need? Based on my age, where should I be?" Well, don't worry. We actually break down the math for you. We know that by

[06:02] the time that you get to age 30, we want you to have one times your annual salary financial independence, all the way out at age 65, if you want to truly be financially independent, we want you to aim for having a 20 times your annual

[06:18] salary saved up. So, if you can start at one time by 30 and end up at 20 by 65, what are the things that I ought to be doing along the way?" And just like your

[06:31] money can compound and grow, so too does the number you need to hit for financial independence. So, the earlier you start, the easier it becomes. So, if you are that person in your 20s, and we said, "Okay, where should you be? What should

[06:45] you shoot for?" Right now, we know that the median income across individuals in this country, this is not household, this is individual median income, is right at $41,000. So, if the goal is to have one time the

[07:00] median income saved up by the end of this decade, at 30, you should have $41,392 if you were a median income-earning >> Yeah, I think this is fascinating to me is because you can see, look, we

[07:14] understand most people it's it's you get a gold star if you even start saving and investing in your 20s. Because for a lot of Americans, education and other things, it doesn't even happen. But, look how great it is

[07:28] is that if you look at the average balance of 401ks versus the one time income that we've actually put into this analysis, >> there's not too much separation. So, I'm happy to report. Now, look, I wish I

[07:42] could say this continues on for the 40s 50s and beyond but this is why for the majority of you who discover our content this is a golden opportunity for you to let your money work harder than you can in your back your brain and your hands.

[07:56] >> Okay so what should you focus on in your 20s well in your 20s we really want you master behavior in your 20s that's going to be the fuel that fuels your financial

[08:08] building engine all through your 30s 40s and 50s and one of the very first things and if you can figure this out early on you've mastered the first ingredient of wealth creation if you can figure out how to live below your means spend less

[08:22] of your peers. >> Well you have to be disciplined and that that's living below your means is the first indicator that you're disciplined the second one is you keep debt under control look I get it in your 20s you're

[08:36] all these things that come at you between cars you know living out on your you know what the the thing that will solve all my problems is my lack of cash flow right now is debt is because they give you these credit cards they give

[08:50] everything I'm telling you [snorts] stay out of debt as long as you possibly can. solution you think it is it's actually going to be the bridge to nowhere it's it let's actually build up live responsibly be disciplined

[09:06] actually get all the rewards but the >> first thing is just keep that financial footprint as small as possible so that get invested. >> Yeah the other thing we want you really

[09:18] it relates to keeping that footprint as small as possible is measure twice cut once on the large purchases in your 20s just because you can do something just because oh they'll let me borrow money for this car or I can go on that

[09:32] European European vacation or I can buy that house doesn't necessarily mean it's be consumption decisions or even things like going back to school and getting a master's degree and taking out student loans, recognize that the decisions you

[09:46] make in your 20s can have a long tail with you into your 30s and 40s. So, make wisely. >> Start saving and investing, guys. We don't care how small it is. Little things can have huge results. If you

[10:00] want to get motivated, go check out our wealth multiplier. But, a lot of you, I your wealth multiplier. Where am I going to find the margin? progress as you're doing all of these things is using Monarch, who's a sponsor

[10:15] >> You guys know we don't endorse a lot of products, but every now and then something comes along that is truly a great product, and it's helpful to our financial mutants. And people on our team love and use Monarch, and we want

[10:29] >> And now is a great time to try Monarch. I don't know about you, but at my house, it is spring cleaning right now. Everyone's decluttering and organizing things, and when it comes to your money, you can actually let Monarch do the

[10:42] financial spring cleaning for you. >> One dashboard that gets your entire financial life organized. No more clutter, no more mess, no more scattered logins, just accounts, investments, property, and more, all in one place.

[10:55] Monarch for half off. You heard that right, just $50 with promo code Money >> One of my favorite things about Monarch is their Sankey diagram. It's just a great visual way to see exactly where your money is going every single month.

[11:10] >> Monarch is more than just a budgeting app. You can use it to set money goals financial plan. And as a financial advisor, we absolutely love that. >> Yeah, Monarch is perfect for financial mutants. And even better, we've got a

[11:24] discount for you guys. >> So, make sure you use code moneyguy.com to get your first year half off at just $50. >> That's 50% off your first year at monarch.com with code money guy. Okay,

[11:37] so then once you find that margin, once you've able to figure out where are my dollars, now you get to start thinking, "Okay, I want to start using that margin, putting money into my 401k, taking advantage of this amazing wealth

[11:50] one of the questions you might have is "What do I need to know? What are the familiar with with my 401k?" And we think there are three big ones you ought to put money in there, your match, what are you going to do with your money, how

[12:05] invest those dollars? What actually happens when you put them to work? >> Yeah, so let's talk let's jump into each one of these specifically, your match. and get that free money. If you want to

[12:19] on with your wealth building journey, free money, there's a reason this is operations. >> if you look right now, the average country, according to Fidelity's fourth quarter study, is 4.7%.

[12:36] So the employer is putting almost 5% into your 401k, which in in a lot of circumstances, you have to show up to get it. So one, you want to know if you have to answer is, "Okay, well what types of matches are there? What types

[12:51] plan?" >> of these are structured dollar for dollar, 50 cents on the dollar. The the big part is is you need to go read what is going on, what do you have to do, and then maximize to get that free money.

[13:03] >> Yeah, so there are matching contributions where you put in a certain amount, and then your employer will put that amount in. But then there's another non-elective where you don't have to put any money in, and your employer will put

[13:17] money in. Often times this is you do nothing and your employer puts in 3%. money that can go into your plan called profit sharing. This is where the employer says, "Hey, based on how the company's doing, based on how our books

[13:30] look, we're actually going to do an additional contribution into your plan on your behalf." So, there are three different ways that your employer could be putting money into your 401k for you. >> So, we covered matching first, but we

[13:43] matching, you've got to put in your contributions. And there's really two big decisions you have to make with your personal contributions is how much can you actually put into the 401k? What do you have? What's the margin that you

[13:56] have? And then actually, where are the contributions going? What are the >> Now, I got really excited, Brian, as we were putting together the show, because do you recognize that the average contribution rates across a contribution

[14:08] rates across all 401ks is 14.2%. >> There's a lot of systems that say 10% or 15% is all you need to do. >> But, we had to stop the presses, because that 14.2% actually includes the

[14:22] average the employer match is about 4.7%, that means that the average contribution rate is probably less than 10%. So, most 401k participants are saving less than 10%. You've heard us say, "Our goal,

[14:38] the employer match, we want you saving 25% of your gross income." So, there's close. >> Well, it goes it's even worse than that. employers doing a lot of the heavy lift,

[14:50] but when you find out how leaky 401ks are, if you think about from the time the money goes in to by the time people are needing to pull this money out for retirement, it breaks my heart to hear that 40 cents out of every dollar

[15:02] disappears due to premature early withdrawals from 401k. So, a lot of people are when they change jobs, they or they have hardships or other things. we're not against people understanding this is a break glass. You have

[15:17] you understand that a hardship is a true hardship, because a hardship, if you're not being serious about that question, cross that retirement threshold. >> so there are two pieces of not great

[15:30] news. Savings rates are a little bit low and the 401k's are leaky. Let's give you a piece of good news though. 38.4% of folks over the last year increased their 401k saving percentage. So, that's a good sign that we're moving in the

[15:46] this isn't necessarily for everybody. There's a reason we have what we call the financial order of operations. If you're someone who's still struggling with high interest debt, or you don't have a fully funded emergency fund, yes,

[15:58] we want you going out there and getting that employer match. We want you doing you putting more money into the 401k until you've paid off that high interest emergency fund. You've taken advantage of the tax-free accounts like the Roth

[16:12] IRAs and the HSAs. And then, when you have excess margin above and beyond that point, that's when we want you to begin increasing your 401k contributions. >> look, we take some flak because our goal is to try to get you to 25%. I realize

[16:25] that 25% does include the employer match as long as your income is under 200,000 for married couples, 100,000 for single individuals. More to come on that. But, understand in your 20s, this is aspirational. If I would even if maybe

[16:40] you start out when you're in your mid-20s at 5% and then you try to add a percent every year. Or maybe you're a person that every time you get a pay raise, you try to give 60% of that pay raise to additional contributions to

[16:52] your 401k and the other 40% can go to lifestyle. Just do something, start small so that your army of dollar bills can start building in the background. >> there were three things. It's okay, who can put money into the accounts? What do

[17:06] the third thing is, what do the accounts do? What do my putting money in your 401k, you recognize there is one additional step. dollars. Far too often we see people say, "Okay, I did it. I signed up my

[17:22] you investing again?" And they kind of look with a blank stare. Oh, "I don't know." If you don't make selections inside your 401k, a lot of default investment option. Well, for a lot of plans that default investment

[17:35] option is a stable value fund or a money market fund. Well, now, instead of you having the wealth multiplier, where for a 20-year-old every $1 can turn into $88, if you just have it sitting in a money market inside of your 401k, over

[17:49] that same time period, that $1 might only turn into $3. That is a very, very different thing. So, make sure you understand where your money is being invested inside of your 401k fund. >> one breaks my heart is because just you

[18:02] people also just understand that when you're young and you're decades from retirement, it's okay to take some aggressive risk is because what feels risky in the short term can actually be really good for you in the long term cuz

[18:17] you're letting that compounding growth, the volatility gets smoothed out by the time horizon that you have. Don't sleep on that. Too many people I think, Lane, when they're young and they have decades, go way too conservative and you

[18:29] considering your investments. >> Brian. Now, let's move from the 20s into the 30s. When we look at average 401k balances, again, this is according to Fidelity, for a 30-year-old, remember the average 401k balance in this country

[18:42] the average 401k balance in this country right now is about $37,100. By the time we get to 35, the average 401k balance is a little over $63,000. And then by 40, the average 401k balance is just under six figures at $97,164.

[19:01] 401k balances, but how much should you have or what do you need to be successful on this journey to getting 20 times your income by retirement? >> So, remember, we wanted one times our annual income by 30. So, by the time we

[19:14] get to 40, we want to have three times our annual income. So, again, if we're thinking about the median income, the median individual income in this country right now is $59,800. So, by the time you get to 40, we want

[19:28] you to have three times that amount. So, if you think about the average 401k if you think about the average 401k balance relative to where your portfolio value should be in total if you're a median income earning American, now

[19:42] You're beginning to see some spread. At age 30, it's not all that close. There's about a 4,000 3,000 4,000 dollar difference. But, by 35, average 401k balance is 63,000. We want you to have 101,000. By age 40, average 401k balance

[19:59] is $97,000. We actually want you to be at $179,000 if you're a median earning a median income earning American. a lot that just happened between the age of 30 and 40. It's just statistically,

[20:15] they need to be. And that's that's probably because the the 401k and the employer match is covering a lot of ground when you're in that early 20s to right there at the 30 age. But, between 30 and 40, you start seeing a separation

[20:29] there where you better have more assets outside of just your 401k. You better be funding the Roth for you know, your Roth IRAs. You better be funding your after-tax accounts. Get serious about this because what we want to show you

[20:42] now, look, I gave you this is the tough love treatment where I'm saying make 401k, but don't get overwhelmed because if you do this right, remember, early and often is your friend. If you do this right, the money will start doing the

[20:56] heavy lift for you by growing upon itself. supposed to be at age 30, just that $41,392 dollars had at 30 will grow over this decade to be about 96,553.

[21:11] Remember, your goal is to get to 179. So, just the money that you would saved So, just the money that you would saved up until 30 will do about 54% or half of the heavy lifting for you. So, you got to figure out how do I bridge the gap?

[21:24] maybe you're someone who's saying, "Well, guess what, guys? I'm not there. "Well, guess what, guys? I'm not there. I didn't start 30s with $41,000. I'm just now coming out of the starting blocks." That's okay. We know that

[21:37] according to Charles Schwab, the average American doesn't begin investing until age 30. That's all right. You're still early. You still have time, but now you have to take it seriously. >> Yeah, this is the look for the 20s. It's

[21:52] anything in your 20s, you're going to be a-okay. But, 30s, you still have a great wealth multiplier. You still have a lot of time on your side, but you do need to get very serious. And this is where we want to go ahead and fine-tune what you

[22:05] need to focus on. The first thing is, let's optimize what's going on. You know, cuz we're trying to get you to 25% savings rate as fast as possible because the heavy lift for you. >> If you can get there, the odds are

[22:20] you're going to give yourself maximum flexibility in the future. So, the earlier and sooner you can get to 25%, the more flexibility, the more slack Another thing we want you thinking about in your 30s as you're thinking around

[22:34] optimization is, okay, I was always doing Roth. I was always doing Roth. I was always doing Roth when it came to my 401k contributions, but now perhaps my income has increased. I'm in a different tax bracket than it was in my 20s. Does

[22:46] it still make sense for me to be doing Roth contributions or should I >> I know, you know, one of the things I always think about when I'm trying to is, guys, if you do this early enough, you'll have

[23:00] more flexibility and options later. Cuz I I get it. Life happens. Maybe something happens in your 40s or 50s and you get forced to retire sooner. If you can get to that 25% that much sooner, you're going to have more flexibility,

[23:13] more options. Don't sleep on that. Having that slack in the system for the future. But I'd also like to talk about vesting schedules because uh it's not is very generous with the profit

[23:25] sharing, a lot of times you don't get to keep that unless you stay there long schedule work and what do you get to keep? What do you not get to keep? So deciding whether to stay or leave. >> Yeah, basically the employer says to

[23:38] your account. We're going to do our part, but there's something that you certain amount of time before that money becomes yours." And so there are a few different ways that vesting schedules go out. So if you're someone who has a safe

[23:51] plan document and the employer says, "Hey, we have safe harbor 401k contributions." The odd odds are that those contributions are going to be 100% schedule, it won't be any more than two years. So that's money you can take with

[24:06] you. Any money that you put into the plan, any of your salary deferrals, that if you've only been at the employer for a year and you put your money in there, you. But you may have some sort of employer contribution that has what's

[24:22] called a cliff vest. And this basically says, "Okay, we're going to stretch out got to be here for 3 years, but once you've been here for 3 years, then you'll have access to 100% of your funds. Whatever you've earned, whatever

[24:35] the employer's put in for you, you get to take that with you." Or you might see called graded vesting. And the way the graded vesting works is you slowly unlock a different percentage over time, usually over the course of about 6

[24:49] usually over the course of about 6 years, that it goes from 0% to 20 to 40 to 60 all the way up to 100%. You just about changing jobs or you're thinking about changing employers, you understand

[25:02] okay, where am I on my vesting schedule? We would hate for you to leave a job or We would hate for you to leave a job or make a change a week, a month, a quarter early when you could have stayed just a little bit longer to unlock those

[25:15] account. >> to get too into the weeds, but even last day provision. Because a lot of people as long as you can work 6 months, you might qualify for the enough thousand hours of service that

[25:29] you get that year, but if there's a last day provision, you might want to wait till leave to putting your notice until after you fully vested that additional year. Don't sleep on this. And then it's worth repeating. What sits on top of all

[25:41] this, whatever you put into the plan, you get to keep no matter what. I want I this talk about safe harbors, vesting, and so forth. Your contributions are what strings are attached to what the employer is putting in on your behalf.

[25:58] the 20s, we've talked about the 30s. Now, let's jump into the 40s. Now, as the 401k balances start increasing a little bit. Remember, at age 40, the average 401k balance across a 40-year-old right now is about $97,000.

[26:15] Average 401k balance for a 45-year-old is about $139,000. And the average 401k balance for a 50-year-old in this country right now is a little over $190,000. >> Okay, but how does this compare to the

[26:27] median incomes and what people will actually need to have a successful >> So, we're start Remember, we started at age 30 at one times our annual salary. By 65, we want to get to 20 times. So, the first stop was age 40. We want to be

[26:40] at three times our annual salary. By the time we get to 50, by the time we get to the end of the 40s decade, we want to be at 6.4 times. Well, if we think about the median income for folks in their 40s, it's right around $72,000 a year.

[26:55] So, if I'm a median income earner in this country, by the time I get to the end of my 40s, at age 50, I should have a total portfolio value across my 401k, taxable accounts, IRAs, all those accounts, of about $461,000.

[27:15] someone that age was 190, so again, we're seeing a wider and wider and wider chasm beginning to build. >> Yeah, this is this is the part that I I itself? You know, if you look back, cuz a lot of you are going to be in your 20s

[27:28] and 30s and you're watching this to see what happens in your 40s and 50s, this is important. Is because early and often is where you get the traction, This doesn't mean that if you're watching this for the first time in your

[27:41] 40s and you're saying, "What do I do?" You still have a lot of control for just but more and more, the more you delay the decision of investing, the shoulders. So, guys, make sure that you're building up assets outside of not

[27:56] just the 401ks, but those Roth IRAs, those after-tax savings accounts, anywhere that you can actually start building money for the future. Your future self will be just sloppy happy if you make those good decisions.

[28:09] something, if you do it right, you get to do it light. If you do it wrong, you building wealth is no different. Cuz if you've been doing the right things in of hitting the mile markers we're showing, do you recognize that if you

[28:24] $179,000 saved up by age 40, saved up by age 40, that just that pot of money alone will grow to $379,000 by age 50? Over this next decade, that's

[28:39] by age 50? Over this next decade, that's 82% of the way towards your 460 goal. As you can see, not only are the dollars compounding, Not are your decisions compounding, but the work that you did early on in your financial life is

[28:52] beginning to compound. If you can figure this out early, you can start making those good decisions early, your journey becomes easier and easier and easier. >> So, this is also the point you can start having we need to focus on what is

[29:05] specifically are your areas that we need to have a big interest in. And with this the first thing you have to ask yourself, can you even use the match? Now, look, the more income you make, the

[29:18] more the responsibility of your success falls on your shoulders. And that's why single individual and you make over $100,000 or a married couple making over I don't want you counting your employer match anymore in that 25% saving and

[29:35] investment goal. And the reason is is because you're getting away from the social safety net of social security and other things, you've got to be disciplined so that way when you stop working, the music doesn't just get

[29:48] ripped out from behind you and you're like, "Holy cow, I have no assets that will actually replace my good income." This will help you focus on the responsibility of building an army of dollars to work just as hard as you.

[30:00] >> Another way you can sort of fine-tune your plan is ask the question, am I at the point now where I can max out my 401k? Not just get the employer match, not just put in the minimum amount to get the maximum employer money, but can

[30:13] deferral limits? And for those of you that are curious, in 2026, the maximum salary deferral you can do, either on the pre-tax side or the Roth side, is $24,500. That comes out to just a touch over

[30:27] That comes out to just a touch over $2,000 a month. We still love you doing Roth IRAs and love you doing HSAs, but if your income has gotten to the place to where those alone don't get you to 25%, consider maxing out your 401k at

[30:41] >> And then let's talk about where you actually put the money. You know, you you've seen this. We've gone through the decades. The separation from what's in for financial independence starts getting different. That's because this

[30:55] is step seven of the financial order of operations in the fact that the majority first steps one through six is to keep you out of danger by having enough cash reserves. And then the rest of it is kind of tax favored or free money from

[31:09] in step seven, how are you going to use this money and have your live your best life? That's going to include you saving up after-tax assets, actually focusing on what are your goals. If you're part of this FIRE/FINE movement where you

[31:23] have to keep doing these things, you better have assets built up because if you can't get access to a 401k until you're 55 or to an IRA until you're 59 and a half, you better have a bridge of assets that's going to get you to that

[31:37] >> All right, Brian. Now let's talk about the 50s and beyond. Let's talk about this is sort of the next phase of wealth building. If we look at the average 401k balances according to Fidelity, average 401k balance for a 50-year-old have

[31:50] already established about 190,000. But now it starts to level out a little bit. now it starts to level out a little bit. Average 401k for a 55-year-old, 240,000. Average 401k for a 55-year-old, 240,000. Average 401k for a 60-year-old, 265,000.

[32:03] And then the average 401k balance for a 65-year-old, 271,000. start to see where the leakiness is in these 401ks cuz this is showing actual balances. This is not what just a numeric exercise of what money can

[32:18] grow to. You can see people are somehow the money's just not compounding upon itself like it should be. And this is why when you say, now when we shift the exercise to how much do I need? Guys, this is going to blow your mind

[32:31] and this is why you can't let your 401k be leaky. And this is also why you have of the 401k. >> So remember, at 50 we wanted to be at 6.4 times our annual income. By the time we get to 60, we want to be at 13.7

[32:45] times our annual income. And then when we get to financial independence, if we want to be at 20 times our annual income. So if we think about the median income for someone in their 50s, it's a touch under $72,000, $71,600.

[33:01] Well, now when we look at the average 401k balance relative to the prescribed portfolio value, there's a big difference. At age 50, the average 401k is 190,000. We want you to be at 460,000. At age 55,

[33:17] the average 401k is 240,000. We want you to be at 673,000. We want you to be at 673,000. At 60, the 401k balance is 265, million-dollar land. And by the time you get to financial independence, if you

[33:30] are a median income earner earning about $72,000 a year, the average 401k balance is about $271,000. But we would argue you need your total portfolio to be a little over 1.4

[33:43] >> I I don't mind, you know, I've been doing things long enough that I feel like I have a purview of where success is. And I think it's interesting when you look at for a 30-year-old, when we looked at actual balances in 401ks to

[33:56] what we've calculated at median of one time, there was only a $4,000 spread. "Well, why is that? Why do we all start out where it seems so close to success?" heavy lifting. >> They were actually funding 5% of your

[34:11] salary into this. But as it got to be more and more important for you, the average saver and investor, to start putting money to work, not just your employer, people fell down. They they fell down. And that's why you're a

[34:23] financial mutant. You're watching financial content. This is why it's so important for us to hone in on what can you focus on in your 50s that's really going to move the needle? The first thing is focus on landing the airplane.

[34:36] I know you're not average. You're beyond average, so you're not struggling with American is, but you still probably ought to check out catch-up contributions. You ought to make sure you understand once you get to be 50 and

[34:49] government offers us. >> Yeah, maybe you're behind. Maybe you you should have been doing. Well, that's great. At this age, now you have an We've already said that the salary deferral maximum is 24,500,

[35:06] but that's for those that are under 50. If you're over 50 this year, you can actually save $32,500. And if you happen to be between ages 60 And if you happen to be between ages 60 and 63, you can actually defer $35,750

[35:20] into your 401k. So, if you've not been doing what you're supposed to be doing, or maybe you're just not quite at your number yet, this is a great opportunity to use that extra margin to get there. >> And don't sleep on the rule of 55. A lot

[35:32] you're 65. You want to leave the workforce when you're in your 50s. Well, this is where 401ks have a unique benefit that if you actually separate benefit that if you actually separate service in the year you're 55, you get

[35:46] actually pull this money out penalty free. So, don't sleep on it. We've used bridge because maybe they couldn't get to their IRA assets cuz that's 59 and a half. 401ks have unique opportunities. Also, think about we said rule of 55.

[36:00] This might 457s and others might even have more favorable. The biggest thing >> Yeah, another thing we want you thinking about when you're trying to land the plane is that recognize hopefully the size of your portfolio in your 50s is

[36:13] very different than the size your portfolio was in your 20s. That's likely true. Well, also the composition, the way you invest in your 50s ought to look different than the way you invest in your 20s. So, do you have

[36:25] an allocation that's appropriate to your timeline? If you are someone who's going these dollars, have you adjusted appropriately? Are you at the right place on the risk spectrum so that if you were to have a bad sequence of

[36:39] return, you're going to be protected and inoculated against that. Make sure that burying your head in the sand. >> And then the last thing to kind of close this out is measure twice, cut once. Look, we have built an entire platform

[36:51] that if you can just make small decisions, they can create dramatic, huge differences in your future. And I love the fact that we've created content that lets a do-it-yourselfer be amped up to speed up their success. But you will

[37:04] reach a point that even simple that you've tried to keep your life organized, efficient, and simple, you'll create complexity. Success creates complexity. And you just don't know where your blind spots are. You don't

[37:17] don't know about what's coming with retirement. That's where we say measure the porchlight on for you for all the complexities that come your way with how does this integrate from tax planning,

[37:31] what can I pull out, is Social Security going to be taxable, what about Medicare premiums? All these things, you know, how do I know about Roth conversions? All these are the type of things that we help clients with so you don't have to

[37:43] be an expert. Use the simple stuff we're sharing, but when you create complexity, take the relationship to the next level. I'm your host Brian, joined by Mr. Bo, I'm your host Brian, joined by Mr. Bo, Money Guy team. Out.