Key Points
-
A 401(k) can be a key way for individuals to save up for retirement.
-
The average 401(k) balance for millennials is just above $67,000.
-
Aim to contribute at least as much as your employer will match.
There are few, if any, tools as effective for saving for retirement as a 401(k). It’s a win-win: You get to save and invest for retirement, securing your future, and you get a tax break along the way by being able to lower your taxable income in the year you make contributions.
For many people, a 401(k) will be their largest source of retirement income, so it’s natural to wonder how your savings stack up against your peers’ and if you’re saving enough. According to statistics released by Fidelity, the average 401(k) for millennials — those born between 1981 and 1996 — is $67,300.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
It’s not time to press the panic button yet
Before deciding if you’re lagging behind in 401(k) savings, it’s important to note that low or high balances can skew averages, so these numbers shouldn’t be taken as a definitive benchmark. That said, if your 401(k) savings aren’t where you want them to be, there’s still time, as the oldest millennials are 44 and have around two decades until retirement.
Image source: Getty Images.
The best thing you can do at this point is move 401(k) savings up higher in your financial priorities. That doesn’t mean increasing your contributions to the point where it could jeopardize your current livelihood. However, even slight increases can make a huge difference over time — especially with the power of compound earnings.
I recommend that you review your current contribution rate, make sure you’re taking advantage of your full employer match (if it’s offered), and decide if you need to cut expenses somewhere in order to be able to comfortably increase your contributions.
The $23,760 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income.
One easy trick could pay you as much as $23,760 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Join Stock Advisor to learn more about these strategies.
View the “Social Security secrets” »
The Motley Fool has a disclosure policy.
