George Kamel - Average 401(k) Balances in 2025 (Are You On Track?)

Starting point is 00:00:05 America is headed toward a retirement crisis. And I'm not just being dramatic like those fear-mongering cable news anchors or a cat who's just seen a cucumber. Okay, this is a fact. Nearly half of Americans aren't saving at all for retirement, and those who do save aren't saving enough. So how much should you be saving, and what can you do if you're behind?

Starting point is 00:00:24 Well, good news for you. In today's video, we'll take a look at the median 401k account balance by age so you can see how your nest egg stacks up. And more importantly, I'll unscramble what a grade A nest egg looks like based on your age, and by the end, you'll hatch an excellent plan to retire with dignity. But first, do me a quick favor. Give those like and subscribe buttons a clock. I mean, click. Sorry, all right.

Starting point is 00:00:45 I'm done. I'm done with the puns. I thought my jokes were bad. Okay, all poultry puns aside, let's look at the data, which comes from Vanguard's recent How America Saves Study. First up, Americans under 25, median balance in their 401K, $2,816. The average deferral rate, which is how much of your paycheck you can truly, to your retirement account, not counting employer match, 5.4%. And by the way, you'll notice that we're focusing on the median balance here instead of the average.

Starting point is 00:01:13 And the reason is, averages include crazy high numbers and crazy low numbers, which can skew the results. Now, median is simply the number right in the middle of the data if it were listed from smallest to largest. So the median gives us a more accurate picture. So for this age group, the numbers are pretty low. A 5.4% deferral rate is sad, even when you add in the typical employer match of around 4%. And I get it, you're young, you're probably not earning much yet, but the earlier you start investing, the better. Even just five years can make a huge difference and could really impact when you'll be able to retire. So get started building a strong financial foundation as soon as you can.

Starting point is 00:01:48 Before you start investing a single penny, focus on getting out of debt and building your emergency fund. And when you've done that, you can start investing 15% of your income into these retirement accounts, which is almost triple the amount these folks in their 20s are currently investing. It's crucial to get started early because at this age, you have time. and compound growth on your side. And those two things combined are a pretty powerful wealth-building force. Let me give you an example using our investment calculator, which I will link in the description below if you want to check it out. Let's say your annual salary is $50,000 and you invest 15% of your income. That's $7,500 a year or $6.25 a month. Now we're going to start at age 25, and we're

Starting point is 00:02:25 going to go to age 55, investing that $625 a month starting from zero. Let's see what happens, assuming a 10% average rate of return. Bada bina bada boom, calculate $1.4 million by $55. That's over a decade before the national retirement age, and it's if you never get a raise or increase your contribution amount, which would mean you would likely have way more. Just for kicks, let's kick it out to 60 and see what you'd have. 2.3, 65, 3.9.

Starting point is 00:02:57 That's incredible. So the bottom line is, get started early to give compound growth as much time. as possible. So how much should you have saved for retirement by 25? Well, a grade A nest egg would be $20,000 or more by the age of 25. Now, if you don't have that, don't freak out. If you're debt-free with an emergency fund and you're investing 15% before the age of 30, you're doing so much better than most Americans. And you've still got plenty of time at that point to build up that nest egg. All right, let's move on to Americans age 25 to 34. Median balance, $14,933. Average deferral rate, 6.7%. Now, notice that the average American in this age group still isn't contributing enough to their retirement accounts.

Starting point is 00:03:36 And I'm guessing this is because a lot of people in their late 20s and early 30s are doing expensive things, like starting families and taking on mortgages and being a bridesmaid and 11 weddings for girls that you don't even like that much. Plus, at this point in your life, you might not even be thinking about retirement yet. You subconsciously said, that sounds like a problem for future me. But that's a huge mistake. This is the time to make saving for retirement a priority. I just showed you the power of compound growth. So if you keep delaying it for future you, you're going to miss out.

Starting point is 00:04:03 Now, if you're in this age bracket and you still have debt, you still have nothing in savings, that is a five-alarm fire you need to put out. So pause investing and get those prerequisites knocked out so you can get back to investing way more. So how much should you have saved up by the time you're 25 to 34 years old? Let's do the math using the same $50,000 salary and a 10% annual average rate of return from our previous example to see what a grade A nest egg would look like for someone in this bracket. So if you're 30 years old right now and you started investing $625, bucks from the age of 25, that's five years of investing, and you can see you would likely have

Starting point is 00:04:35 $48,000 sitting in that one account. So if you have that much, you're on track to a seven-figure retirement and you get a gold star in my book. Let's move on to Americans age 35 to 44. Median balance in their 401k, $35,537. Average deferral rate, 7.1%. Now, by the time you're this age, you're probably making more money than you ever have before, which is great. And because of that, It's easy to fall into the trap of keeping up with the Joneses and lifestyle creep and buying expensive cars and going on vacations you really can't afford. And look, I'm not mad at you for using some of your hard-earned money for a girl's trip to Branson to see Dolly Parton's Stampede.

Starting point is 00:05:11 I mean, who wouldn't want to eat turkey legs while a sequin cowboy honors the troops by making a horse get dangerously close to fire? That's my idea of entertainment. That's the America I want to live in. This is what freedom's all about. Just make sure that you're also thinking long-term and putting enough of your paycheck into that retirement account. So how much should you have saved up by your life?

Starting point is 00:05:28 late 30s to early 40s? Well, using the same salary and expected rate of return from our previous examples, if you're 40 years old and you started investing that $625 a month at age 25, you should be at, wait for it, $259,000 right now. So that would be a grade A nest egg by 40 years old to have in my book. And that is way above that median of 35 grand we saw earlier. But listen, if you're 40 and you haven't even started saving for retirement yet, again, there's still time. Don't freak out. There's less time than there used to be, but hear me out. The average salary for Americans age 35 to 44 is just over $70,000. So if you started investing 15% of that salary starting at age 40 and did that every year until your mid-60s,

Starting point is 00:06:12 you could still comfortably retire with a million-dollar nest egg. Let me prove it to you because I know you're thinking this guy didn't do the math. He didn't crunch the numbers. Well, little do you know I did crunch the numbers. $70,000 times 0.15. That's $10,500. We're going to divide that by 12. You get us are 875 a month.

Starting point is 00:06:28 We're starting at age 40. age 40, age 65, 875 a month, 10%. What? $1.16 million by 65. Don't tell me there's no time. All you got is time. You don't even have your midlife crisis yet. You haven't even bought the Miata.

Starting point is 00:06:45 Don't tell me there's not time. I've got to get me one of those. Moving on. Americans age 45 to 54. The median balance, $60,763. Average deferral rate, 7.7%. Starting to look pretty bleak here. So how much should you actually have saved by this?

Starting point is 00:07:01 Well, if you're 55 years old right now and you started saving $625 a month at age 25, you should have $25, $625, $625, $1.4 million, plus some gray hairs and a full arsenal of dad jokes. So $1.4 million of $55, that is a grade A nest egg. But if you're closer to that median balance I mentioned earlier and you're feeling way behind, there's a lot you can do to catch up. Number one, cut all unnecessary spending so you can increase your contributions. Number two, put each pay raise or bonus toward your investments instead of toward increasing your lifestyle. Number three, take advantage of the catch-up contributions once you hit 50 years old, which for 2025 is an additional $7,500 in that employer retirement plan or an additional $1,000 in an IRA.

Starting point is 00:07:48 Number four, you may want to downsize your home if your mortgage is a heavy burden that's keeping you from building up that nest egg. And lastly, number five, if you still have any consumer debt hanging around by this age, what are you doing? Gary, hey, Gary, come here. a word with you? Pay that junk off, you lollygagging lint liquor? That was just for Gary. If it wasn't you, keep scrolling past that one. Blocked and reported. Now at this point, it's going to take some hard work and sacrifice, but you can still turn this ship around. Also, it's a good idea to talk with an investment professional to make sure your plan will get you where you need to be. Now, if you want to get connected with an investment pro in your area, check out the SmartVestor link in the

Starting point is 00:08:24 description below. Okay, in just a moment, we'll get to those of you age 55 to 64. But first, No matter which age bracket you're in, you should be earning some good interest on your emergency fund and other short-term savings. And a great way to do that is with a high-yield savings account, like the one offered by Laurel Road, a sponsor of today's video. So if you've got a lot of money sitting in a regular old dusty savings account earning dismal interest, it's time for an upgrade. With Laurel Road, your account balance will earn top-tier APY. So if you're saving up for a new car or a girl's trip to Branson, all of that money could be working harder for you. Plus, with Laurel Road, there's no minimum balance required to open an account, your deposits are FDIC insured, there's no hidden fees. Learn more by going to laurel road.com slash George or click the link in the

Starting point is 00:09:04 description below. And before we get back to the 401k stats, let me tell you how to get your personal info away from spammers and scammers. The way I do this is by using DeleteMe, another sponsor of today's episode. Delete Me will find and remove your info from thousands of data broker sites that are selling it for a profit, which can then lead to phishing scams and other unwanted messages. And Delete Me will even send you a report showing you where they found and removed your info and how much time they've saved you. So help protect yourself from the risks of online scams and data breaches with DeleteMe. Right now, you'll get 20% off by going to join DeleteMe.com slash George

Starting point is 00:09:34 or use the link in the description below. Okay, on to the next age group. Americans age 55 to 64. Median balance in that 401k, $87,57,571. Average deferral rate, 8.9%. Now, most people I know would like to step away from their career at some point in their 60s so they can focus on time with family or pursue other passions, like traveling, gardening, or collecting tea bags from the content.

Starting point is 00:09:58 continental breakfast bar. It's called stealing Brenda, and it's why you're banned from every Hampton Inn on the East Coast. Sorry, that was just for Brenda. If you weren't Brenda, keep scrolling. I won't hear it and I won't respond to it. All right, back to the sad numbers. Lots of Americans will have to keep working well into their 60s, even 70s, because they didn't get serious about saving early enough. And maybe you're okay with that, because a recent survey found that more than a third of American workers say their retirement dream involves some sort of work. And that's great, truly. I love that. But if you're going to be working in your retirement years, it should be because you want to, not because you have to. So what would an A-plus

Starting point is 00:10:33 nest egg be at this age? Well, if you're 60 years old right now, and you've saved 625 bucks a month since you were 25, that's 35 years of investing. Let's see where that gets us with our handy-dandy retirement calculator. 2.3 million dollars. Way to go, you. That would be a great A nest egg, and I hope that is you by age 60, if not more. And if you keep it up, it'll only take about three more years to top that 3 million mark. Again, let me prove it to you with math. Bump it to 63 years old and $3.2 million. Let's bump it up to 65. Let's say you keep going. $3.9 million. That's incredible. Now, this brings us to the last age group. Americans age 65 and up. Median balance, $88,48, average deferral rate, 9.2%. Now, that balance is heartbreaking,

Starting point is 00:11:22 because it's clear that many Americans enter retirement totally unprepared. 88 grand is nowhere near enough to cover health care expenses in the later years of your life, not to mention everything else. Now, you might be thinking, well, George, you're not factoring in Social Security. I've paid into it my whole life. It'll be enough to get by. Good luck with that, because according to the Social Security website, the average monthly benefit in February of 2025 was around $1,980 a month. Try a living on that, and you'll see why I call it Social Insecurity.

Starting point is 00:11:50 Boom, roasted, five little booms. Boom! Boom! Boom! Guys, that is approaching the poverty line. And by the way, that's the average. Some people get less than a thousand bucks a month. And here's the final gut punch. At least 52% of workers have never stopped to calculate

Starting point is 00:12:04 how much they'll even need in retirement. Now, while those stats are heartbreaking, I want to assure you, you can opt out of them. And the fact that you're watching this channel gives me a lot of hope. There's also plenty of millionaires out there with a high net worth who are comfortably living out their dream retirement. They've used common sense,

Starting point is 00:12:19 they've worked hard, and they've built wealth that will help them leave a leg of them leave a legacy for their families and their communities. And that's where I want you to end up with enough to live and give like no one else. So hopefully by this point, you haven't fried your nest egg and you'll still have millions of dollars sitting there allowing you to give, save, and spend to your heart's delight. So let me know in the comments. Are you on track? Are you behind? Are you ahead with your retirement goals based on the balances you heard and based on the grade A nest eggs I shared? And if you haven't started yet, do not put this off. Let this be your sign to start investing.

Starting point is 00:12:47 The best time to plant a tree was 20 years ago. The next best time is today. So get out there and stick a big old sugar maple in the ground. It doesn't even have to be a sugar maple. Could be a ponderosa pine, a hackberry for all I care. Just get to plant it. And if you need some hope for your financial future, be sure to check out my book, Breaking Free from Broke,

Starting point is 00:13:04 the ultimate guide to more money and less stress. You can also get this as an audiobook, read by yours truly, and you can get a copy with the link in the description below. And while you're down there in the description, make sure to take our new audience survey. This is the first one we've done for this channel, and here's what we want to know. What kind of content do you guys want to see?

Starting point is 00:13:21 make sure that I'm helping you win with your money goals, and this survey is how we do it. So it would mean the world if you can click the link in the description below to take that survey. And if you enjoy this video, keep watching to find out what your net worth should be by age. I'll also drop a link in the description below. Thanks for watching. We'll see you next time.

George Kamel - Average 401(k) Balances in 2025 (Are You On Track?)

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