I’m 39 with $256K in my 401(k) – am I quietly falling behind, or secretly ahead of the curve?

On the road to saving money for retirement, it’s natural to have your share of doubts. And in this Reddit post, we have a 39-year-old saver who’s done a great job of funding their 401(k) to date, yet they’re worried they’re not where they need to be.

The poster here has a $256,000 balance in their 401(k), and they regularly contribute 10% to 11% of their income, which is a respectable percentage. But the question is, should they be doing more?

How Americans are doing on retirement savings

There are lots of surveys out there that point to average retirement savings balances, but I like to get my data from government sources when possible. So to that end, let’s look at the Federal Reserve’s most recent set of data from 2022.

It tells us that the median retirement savings balance among Americans aged 35 to 44 is $45,000. It also tells us the median balance among Americans aged 65 to 74 — in other words, those who are likely about to retire or retired already — is $200,000.

Based on this, it would seem like a $256,000 balance in a 401(k) at age 39 is fantastic. And to give that more context, let’s say you don’t contribute a dollar more to your 401(k) from this point onward, and you retire at 65. If your investments in your 401(k) give you an 8% yearly return, which is a little bit below the stock market’s average, that $256,000 balance could grow into about $2 million.

Now, let’s remember that the median savings among older Americans is $200,000. With $2 million, you’re looking at 10 times that total. So all told, I’d say the poster here is not in bad shape by any means.

There’s still more work to be done

Even though the poster could sit back and stop funding their 401(k) at this point, it seems silly to do so when they’ve been consistently contributing 10% to 11% of their income. Now I don’t know how much money that amounts to. But let’s say the poster is able to put $1,000 a month into their 401(k) over the next 26 years. Assuming that same 8% return, they’re looking at retiring with around $3 million instead of $2 million, which only sweetens the deal.

So all told, I’d say this poster should feel confident that they’re not behind on savings. And they should continue funding their 401(k) as best as they can.

But it would also be smart for the poster, or anyone else in a similar boat, to consult a financial advisor and make sure their 401(k) is invested appropriately. Investing too conservatively likely won’t yield an 8% return or anywhere close, which could be detrimental to long-term growth.

Financial advisors help savers invest their assets based on factors that include their age and risk tolerance. So while the poster here doesn’t have to worry about being behind on savings, they should get a portfolio checkup to ensure that they’re on the right track.

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