Want to Beat the Average 401(k) Balance? Do These 3 Things

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

[[{“value”:”Image source: Getty Images
Saving money in a 401(k) is one of the best things you can do for your retirement. You’ll need your own savings on top of Social Security, and a 401(k) makes the process of building a nest egg as convenient as can be. Just sign up through your employer, decide on an amount to contribute, and voila — your account will get funded automatically through payroll deductions.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. Now you may be curious to know how your 401(k) balance compares to the average. And Fidelity says that as of the second quarter of 2024, the average 401(k) balance was $127,100.If your balance is much smaller, don’t panic. If you’re fairly young and new to the workforce, it may be that the average retirement saver has had more years to fund a 401(k) than you have. But if you want to do better than $127,100 in your 401(k), here are three essential steps to take.1. Start saving at a young ageThe more time you give yourself to save for retirement, the larger a balance you’re likely to rack up. Say you begin funding a 401(k) at age 45 with $150 a month and do so until age 65. If you’re able to get a 10% yearly return on your money (more on that below), that leaves you with about $103,000.But watch what happens if you start saving that $150 a month 10 years earlier, giving your money 30 years to grow instead of just 20. Assuming that same 10% return, you’re looking at a 401(k) balance of $296,000, which is more than double the average balance today.So if you’re in your 20s or 30s, don’t put off retirement savings just because that stage of life is so far away. Instead, do your best to save some amount of money for retirement each month. And if you don’t have access to a 401(k) plan, don’t sweat it. Check out this list of the best IRAs and open your own retirement account.2. Claim your match in fullThe nice thing about saving for retirement in a 401(k) is that many employers match worker contributions to some degree. This doesn’t mean your employer will match every dollar you put in. But if your company will match up to $3,000 per year in contributions, then putting in $3,000 from your own paychecks gets your account funded to the tune of $6,000 per year.Some people don’t manage to get their full workplace match because they don’t know what it entails. So dig up that information, or ask your benefits coordinator so you know what 401(k) contribution to make each year at a minimum.3. Invest in stocks to maximize your gainsIf you’re not familiar with the stock market, you may find it scary. And the reality is that there is some risk in owning stocks. But if you own stocks for a long period of time, you minimize that risk. And you may find that you need the power of the stock market to grow your retirement savings nicely.Over the past 50 years, the stock market’s average annual return (as measured by the performance of the S&P 500) has been about 10%. That’s why we used 10% in the example above. But you should know that this return accounts for years when the market did well, and years when it most certainly didn’t.Now the nice thing about IRAs is that they let you invest your money in individual stocks. You generally can’t buy stocks individually in a 401(k). But what you can do is load up on S&P 500 mutual funds, which is commonly an option in a 401(k). This allows you to invest in the 500 largest publicly traded companies today.Of course, you could play it safe in your IRA or 401(k). But let’s say you do so by only investing a small portion of your money in stocks, and putting the rest into more stable assets, like bonds. If you invest $150 a month over 30 years at a 6% average annual return (which is what you may be looking at with that sort of investment mix), it results in a balance of about $142,000.That still beats the average 401(k) balance today. But it’s a lot less money than the $296,000 balance we arrived at above by saving and investing over the same 30-year period at a 10% return.It’s more than possible to grow your 401(k) plan (or IRA) balance beyond the average today. And these steps combined should increase your chances of success.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.”}]] [[{“value”:”

Saving money in a 401(k) is one of the best things you can do for your retirement. You’ll need your own savings on top of Social Security, and a 401(k) makes the process of building a nest egg as convenient as can be. Just sign up through your employer, decide on an amount to contribute, and voila — your account will get funded automatically through payroll deductions.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

Now you may be curious to know how your 401(k) balance compares to the average. And Fidelity says that as of the second quarter of 2024, the average 401(k) balance was $127,100.

If your balance is much smaller, don’t panic. If you’re fairly young and new to the workforce, it may be that the average retirement saver has had more years to fund a 401(k) than you have. But if you want to do better than $127,100 in your 401(k), here are three essential steps to take.

1. Start saving at a young age

The more time you give yourself to save for retirement, the larger a balance you’re likely to rack up. Say you begin funding a 401(k) at age 45 with $150 a month and do so until age 65. If you’re able to get a 10% yearly return on your money (more on that below), that leaves you with about $103,000.

But watch what happens if you start saving that $150 a month 10 years earlier, giving your money 30 years to grow instead of just 20. Assuming that same 10% return, you’re looking at a 401(k) balance of $296,000, which is more than double the average balance today.

So if you’re in your 20s or 30s, don’t put off retirement savings just because that stage of life is so far away. Instead, do your best to save some amount of money for retirement each month. And if you don’t have access to a 401(k) plan, don’t sweat it. Check out this list of the best IRAs and open your own retirement account.

2. Claim your match in full

The nice thing about saving for retirement in a 401(k) is that many employers match worker contributions to some degree. This doesn’t mean your employer will match every dollar you put in. But if your company will match up to $3,000 per year in contributions, then putting in $3,000 from your own paychecks gets your account funded to the tune of $6,000 per year.

Some people don’t manage to get their full workplace match because they don’t know what it entails. So dig up that information, or ask your benefits coordinator so you know what 401(k) contribution to make each year at a minimum.

3. Invest in stocks to maximize your gains

If you’re not familiar with the stock market, you may find it scary. And the reality is that there is some risk in owning stocks. But if you own stocks for a long period of time, you minimize that risk. And you may find that you need the power of the stock market to grow your retirement savings nicely.

Over the past 50 years, the stock market’s average annual return (as measured by the performance of the S&P 500) has been about 10%. That’s why we used 10% in the example above. But you should know that this return accounts for years when the market did well, and years when it most certainly didn’t.

Now the nice thing about IRAs is that they let you invest your money in individual stocks. You generally can’t buy stocks individually in a 401(k). But what you can do is load up on S&P 500 mutual funds, which is commonly an option in a 401(k). This allows you to invest in the 500 largest publicly traded companies today.

Of course, you could play it safe in your IRA or 401(k). But let’s say you do so by only investing a small portion of your money in stocks, and putting the rest into more stable assets, like bonds. If you invest $150 a month over 30 years at a 6% average annual return (which is what you may be looking at with that sort of investment mix), it results in a balance of about $142,000.

That still beats the average 401(k) balance today. But it’s a lot less money than the $296,000 balance we arrived at above by saving and investing over the same 30-year period at a 10% return.

It’s more than possible to grow your 401(k) plan (or IRA) balance beyond the average today. And these steps combined should increase your chances of success.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

“}]] Read More