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📂 Category: Retirement Planning,Personal Finance
✅ Main takeaway:
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Key takeaways
- Average retirement savings rates in workplace plans are about 11% to 12% for workers in their 40s; Try to move toward an overall contribution rate of 15% to 20% to close the gap quickly.
- Average 401(k) account balances rise sharply from the early 40s to the late 40s.
- The data suggests that the “typical” saver in their 40s has plenty of room to accelerate saving.
You’ve reached your 40s and suddenly you’re faced with a panic: Have I blown my chance to build a retirement nest egg? You may be stressed out by mortgage payments, children’s activities (plus college expenses, if they’re nearby), and if you feel stalled in your career.
The good news is that you haven’t missed the boat for your retirement — yet. Your 40s are a pivotal decade, but it’s never too late to get back on track and build serious momentum toward your nest egg.
Retirement reality check
Your 40s often coincide with a range of financial life stages: moving to larger (more expensive) homes, childcare or teen expenses, planning for college, expenses for aging parents, and sometimes job stability or relocation – all converging.
If you feel like you’re “falling behind” or that it’s too late to save for retirement, know that this isn’t a moral failing on your part: it’s just the intersection of math and life. It’s also not too late, because savers in this age group tend to see higher earnings, steady employment, and generous employer benefits. In fact, saving more than 20 to 25 years into the future with compound growth gives you a fair chance of serious catch-up.
Data snapshot
According to Fidelity, the average retirement account balance for savers ages 40 to 44 will reach $109,100 in 2025, growing to $152,000 for ages 45 to 49.
but middle Retirement balances are more important, because higher balances can skew the averages. As such, Vanguard reports that the average family of 40 has only about $50,000 in total retirement savings, suggesting that half of Americans in this age group are below that amount.
Superannuation contribution rates are also key: average employee + employer savings are between 11.5% and 12% for workers in their 40s, which is close to the national average of 12%. If you contribute less than that, you’re leaving big future returns on the table.
| Average and Median Retirement Account Balance by Age Group (2024) | ||
|---|---|---|
| Age group | middle | middle |
| <25 | $6,899 | $1,948 |
| 25-34 | $42,640 | $16,255 |
| 35-44 | $103,552 | $39,958 |
| 45-54 | $188,643 | $67,796 |
| 55-64 | $271,320 | $95,642 |
| 65+ | $299,442 | $95,425 |
Who is “on the right track”?
Households today are on track to cover about 78% of their recommended retirement needs on average, and half of them need to make at least moderate changes – meaning only half are on track today. However, savers in their 40s can still move into this last group.
The math is straightforward: A 45-year-old who starts with $50,000 and then maxes out contributions for 20-plus years could build a $1 million retirement fund by age 65, assuming reasonable average returns of about 7% per year.
How do you know if you are on the right track?
Multiple savings: Aim to save about three times your annual salary by age 40, six times your salary by age 50, and continue to increase 10 times your salary by age 67. In other words, if you earn $65,000 a year by age 40, you should aim to save $195,000.
Contribution rate: Target 15% to 20% of gross income (including any employer match). If you’re saving 10% to 12% today, try increasing that by 3% to 5% annually until you reach that amount. If your employer matches 5% when you contribute 10%, you’ve achieved that goal.
Tips to catch up on preparing for retirement
- Take the full match: Every dollar your employer contributes via Match is “free” to you. The average employer promise today is about 4.6% of wages. Don’t leave it unclaimed.
- Automate incremental contributions: Add about 1% to 2% automatically each year or with each raise, which you may almost never notice in the salary you receive, but this compounds impressively over time. Pair it with a “save it all” approach for one-time lump sums like bonuses and tax refunds directed toward your retirement accounts as well.
- Adjust your investment mix: In your 40s, most investors still need a healthy allocation to stocks to reach typical retirement balances. You can “set it and forget it” with a 2040-2050 target date fund if you prefer to make that easier.
- Pay off expensive debt: Prioritize balances that require a lot of interest (buy now, pay later, credit cards, personal loans, etc.). For every dollar in interest you avoid paying, you have a dollar that could double your savings.
important
At age 50, the IRS allows catch-up contributions, an additional $7,500 on top of the standard 401(k) limit in 2025, and an additional $1,000 to an individual retirement account. This means you can save a total of $39,000 per year.
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