According to Vanguard, the average 401(k) has an account balance of over $92,000. However, this is an average figure which could be skewed by a few people who might be super-savers. Looking at the median balance, we get a clearer picture: the median 401(k) account balance is just $22,217. That figure may be lower if you are just starting off in your career; or it may be higher if you have had longer to invest. No matter what, we can easily see that we are not investing enough. Keep in mind also that we are living longer and we will likely have medical expenses as we age.
If we are going to enjoy our golden years, we will need to do better. In 2019, you can invest a maximum of $19,000 per year into a 401(k). In many cases, employers will also match some of your contributions – that is free money.
If you are among those who have access to a retirement plan through your employer, but you are not participating yet – do not procrastinate. Ask your HR department to help you sign-up for your 401(k).
For those who are already participating in their 401(k), consider slowly increasing how much you contribute each year. Even small changes can add up over time.
Finally, pay attention to what you are investing in. Sometimes people will sign-up to participate in their company 401(k), but they forget to select an actual investment. In that case, the company may automatically put you into a conservative option, like a money market fund. Although those tend to be safer and more stable, they also do not earn very much, so make sure you are aware of how your money is being invested to help you reach your goals.
Your retirement is important, so take some time to review your accounts and make changes as needed — it is never too late.
This information in the Financial Tips section is provided for educational purposes only and is not tax, legal, financial planning or investment advice. Neither the information nor any opinion expressed in this section constitutes an offer to buy or sell any securities or advisory products. The information provided is general and is not information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. You should not regard this information as a substitute for the exercise of your own judgment. Investing involves risk.