Should Your 401(k) Be There After Age 50? See How It Compares

Reaching age 50 usually means that your peak earning years are approaching. It’s also the right time to check your retirement progress.

According to the latest How American Saves report from Vanguard, the average 401(k) balance for participants ages 55 to 64 is $271,320.

A benchmark like that can make you feel incredibly secure or deeply worried. But before you answer that number, you need to understand how it is calculated.

The problem is with intermediate balances

An average balance of over $270,000 sounds good. It paints a picture of a highly prepared generation.

However, averages in finance can be highly distorted. A small percentage of company executives with million dollar accounts pull the overall rating very high.

If you look at that ratio and feel like your account is running low, don’t panic. You’re comparing yourself to an inflated number.

Expressed by average numbers

To get a true, realistic assessment of how your peers are doing, you should look at the average balance.

Vanguard reports that the average 401(k) balance for workers ages 55 to 64 is actually $95,642. This means that half of all participants in this age bracket have more than this amount saved. The other half have less.

This figure is a very accurate representation of the everyday worker. It counts people who have faced layoffs, medical emergencies, or periods of high inflation.

Increase your employer match

If your balance sits near the median and you want to accelerate your growth, review your current contribution level.

If your employer offers you a match, contributing enough to get it can be one of the most impactful moves you can make, assuming you meet any matchmaking rules.

Employees age 50 and older can make participating contributions. Directing a portion of any new raise directly to your retirement account can change your financial situation.

Use a rollover IRA for older accounts

Many people change careers several times before they reach the age of 50. You may be paying high management fees for an old workplace system that you no longer recognize.

Moving those funds into a rollover IRA gives you immediate control over your money.

Corporate retirement plans often limit you to a small menu of mutual funds. An IRA gives you access to a large variety of low-cost index funds. Lowering your investment costs keeps more money in your pocket.

Automate your strategy

You don’t need to be a financial expert to manage your rollover funds. Digital platforms have made professional-level management more accessible.

Robo advisors can automatically fluctuate and rebalance based on the schedule you choose. They automatically ensure that your portfolio stays on track with your timeline.

For many people, investing consistently over time can beat the stress and risk of timing the market regularly.

Your next financial step

Comparing your retirement account to national statistics is only useful if it prompts action. Focus entirely on the variables within your direct control.

Keep track of your old workplace accounts. Review your current offer rates. Make sure your money is invested as efficiently as possible.

Consistent actions taken in your 50s will lay the foundation for a more comfortable retirement.

If you are looking forward to your retirement, and you have more than $100,000 in savings, consider getting advice from a professional. SmartAsset offers a free service that matches you with a vetted, fiduciary advisor in less than 5 minutes.