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Average 401k Balance by Age 65 | PLUS # of "401k millionaires" - YouTube
Channel: Holy Schmidt!
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in this video i discuss the average 401k
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account balance
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of a 65 year old in this country coming
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up next
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on holy schmidt holy schmidt
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there are a lot of financial questions
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going into retirement but one of the
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most common is how do i compare to
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others
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in terms of my 401k balance this video
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will cover off
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the answer to that question stick around
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to the end because i'm also going to
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disclose
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the number of 401k millionaires
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here in the u.s and i will do this both
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by percentage
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of 401k balances out there and also
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by an absolute number all right let's
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get into it
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when i post averages here on holy
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schmidt
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i get a lot of positive comments from
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people for example
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one of my more recent videos is the
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average debt balance of a 65 year old
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that video had hundreds of comments
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overwhelmingly positive
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but there were a few that asked what's
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the point
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it's a fair comment for those that
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aren't focused in on the question so
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let's talk about the benefits and
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limitations of what you're going to see
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here on this video
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first the benefits i've never been a big
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believer that
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ignoring information that's available is
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a good idea
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if it can somehow help you or at least
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not hurt you
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more information is almost always better
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than less information
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particularly when you're thinking about
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your own retirement
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it's the discussion that the information
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facilitates
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not where you personally sit in the
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continuum
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of how much you have in your 401k versus
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others
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knowing what the averages are allows you
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to ask better questions and understand
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what's going on in the world around you
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but there are also limitations and let's
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discuss what those are
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the first is where you live and how you
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live if you live
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in a low cost small town outside
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of milwaukee wisconsin
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your cost of living is going to be
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a lot less than if you're living in new
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york city
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the average 401k balance also doesn't
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contemplate other things like other
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assets you might own
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your home rental real estate
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a securities account where you have
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other investments
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a pension this video also doesn't
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discuss whether or not your partner has
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a 401k and last but not least it doesn't
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discuss
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your debt balance if you have a million
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dollars of assets but you have two
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million dollars of debt
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you are in an insolvent position
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and the last point is that 32 percent of
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the workforce has contributed to a 401k
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yet 79 of the workforce has access to a
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401k
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this means that less than half the
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people who could be contributing to
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their 401k
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actually do before we begin please make
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sure you click subscribe and
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notifications
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so that you get alerted the next time i
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post a video i post about twice a week
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let's begin by discussing some basic
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terms
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the first is mean mean is the
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average of all of the 401k balances
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that were reviewed to make up the answer
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that you're going to see in a few
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minutes there were 5 million
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401k balances that vanguard assessed
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so this information comes from vanguard
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and the mean number
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is simply adding up the balances of all
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five million accounts
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and dividing that by five million and
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another way to look at this and more
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reflective
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frankly of reality for most people is
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the median
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it's the account value of the person
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right in the middle
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if you have five million accounts that
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are under review
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it's the value of the two million five
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hundred
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thousandth account the reason that the
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median
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is a much more representative number is
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that you can have a few very large
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balances
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at the top that skewed the averages way
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up in fact you will see that that's
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exactly what happened in just a minute
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or so
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and as i mentioned before this
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information comes from the vanguard
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2020 assessment of 5 million
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401k accounts the data here is
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representative of the much broader
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universe of 401ks so what are the
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averages
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the average 401k balance of a 65 year
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old
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is 216 720
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dollars the median balance is 64
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548 an incredible difference between the
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two and the reason is as i said before
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you have a few very large balances at
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the top
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skewing the averages way up but the
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median number
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is more representative of the middle of
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the pack
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and the answer to the question about
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401k millionaires
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1.6 of 401ks out there
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have a million dollars or more in them
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so with a workforce
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of 155 million people that's the current
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workforce here in the united states
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and an average uptake of 401ks of 32
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percent
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1.6 of the 32 percent equals
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744 000 401k
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millionaires so what does that mean for
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you well
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it depends on what your benchmark is of
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course
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if you want a million dollars in your
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401k
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you need to save early and save often
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most of you are probably pretty close to
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65 and don't have anywhere near
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1 million dollars in your 401k in fact
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many of you might not even have 64 548
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dollars
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in your 401k it's important to point out
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that if 32
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of the workforce has a 401k
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that means 68 of the workforce does not
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my guess is those folks the majority of
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them anyway
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aren't independently wealthy and based
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on
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data that i've researched for other
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videos
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most of that group has less than five
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thousand dollars to their name
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if you're above sixty four thousand five
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hundred and forty eight dollars it
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doesn't mean that it's time for you to
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take your eye off the ball and stop
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saving conversely if you're below that
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number it doesn't mean that it's time to
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give up
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and throw in the towel whether you're 65
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or 25
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every day you should be pushing to put a
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little bit more
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into your retirement account if you like
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this video please make sure you click
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subscribe and notifications
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i post about two videos a week and
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retirement information is changing
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quickly particularly in this day and age
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with
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inflation and other factors so make sure
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you click subscribe notifications so
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that you get alerted
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the next time i post a video also check
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out this video on the absolute maximum
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payment anyone can receive from social
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security
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this is jeff schmidt thanks for watching
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