The Average Retirement Savings By AGE! (2025 Edition)

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2:50What's up, everybody, and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of MasterMoney.co. And today on the Personal Finance Podcast, we're going to be diving into the average retirement savings by age in 2025. If you guys have any questions, make sure you join the Master Money newsletter by going to mastermoney.co slash newsletter. And don't forget to follow us on Apple Podcasts, Spotify, YouTube, or whatever podcast player you love listening to this podcast on. And if you want to help out the show, consider leaving a five-star rating and review on Spotify, Apple Podcasts, or your favorite podcast player.

3:29Now, today, we're going to be diving into the average retirement savings by age. And we're going to dive into Fidelity's data, where they looked at millions of different 401k and different retirement plans and looked at how much people had in those accounts by age. Now today, what I'm going to go through is I am going to go through the different age levels and how much they have saved. But then in addition, right after, I'm going to talk through some of the challenges that you have by each decade, meaning that what are some challenges that people have in their 20s versus people in their 30s versus people in their 40s?

4:00And how do you overcome some of those challenges to ensure that you can save enough for retirement too. So I absolutely love doing these episodes because they are super, super helpful for a lot of people. And so when we're talking about this, Fidelity has this chart of a 401k balance by age. And this chart is going to help you kind of visualize and see, hey, most people do not have enough saved for retirement. And so we want to make sure that we make those changes. And so we're going to overcome those challenges as we go through this. So without further ado, let's get into it. All right. So if you're in your twenties, what is the average retirement savings by age?

4:38Well, according to Fidelity's data, the average 401k balances for people in their twenties, if you're between age 20 to 24 is$7 ,300. And if you are age 25 to 29, it is$24 ,000. Now this is something where we are seeing the average person who is in their 20s, they are starting off with a lower income or entry-level salary. And so because of this, because you have lower income or an entry-level salary, it is a lot harder to figure out what the gap is going to be. Now, what is the gap? That is the difference between your income and your expenses. And so many people who are in their 20s, they are just entering the workforce.

5:18I know my first job when I left college was a very low-paying job. I had an entry-level job. I was making$30 ,000 every single year. And I realized very quickly, it is very difficult to have enough cash on hand to also save for retirement. And so this constraints how much you can save or divert towards retirement. Also, a lot of people who are in their 20s, they have a high debt burden, specifically when it comes to student loans. So I know how frustrating student loans can be. And every single year, it seems like the rules are changing with your student loans, and it becomes very difficult to plan on how you can pay those down.

5:51And so this is constraining a lot of people when it comes to their budgets, trying to figure out how to save enough and get more dollars in those retirement accounts. Also is they don't have financial habits yet. So when I first graduated college, I've told this story a million times, but I didn't have those financial habits in place yet. And you have to kind of learn as you go. And so because I did not learn to budget, I did not learn to save and figure out where all of my money was going by the end of the month, I never truly knew how much was left over. And so that is a huge thing that I think a lot of people in their 20s have to go through also is just uncertainty.

6:27So early career is often a time of transitions. So you're either changing jobs and job hopping because there are better opportunities to make more money and or you just don't like the initial place that you started to work or you're trying out new industries and seeing if you like those industries. And because of this uncertainty, sometimes you can have setbacks when it comes to your finances. And also there could be lifestyle pressure. So maybe some of your friends are making more money right off the bat and they're going out on these vacations and doing these things. And you want to do the same exact things.

6:54And so you have some of that lifestyle pressure, that lifestyle inflation coming into place. So we want to make sure that we are thinking through all of these challenges that you're going through. Now, how do you improve your retirement savings in your 20s? Because people in their 20s, they obviously just have tons of different challenges that are coming up. In addition to the big one we did not talk about, which is the cost of living. It is very expensive right now to live. And when wages are so low, the cost of living is high. It is difficult to get by with some of that stuff. And so we need to figure out how we can improve our retirement savings in our 20s.

7:26Now, here's one thing I want you to note, 20 year olds, because you're in your 20s, you need to note that overall, this is the decade where even small amounts of money are going to make a huge impact to your retirement over time. So even if you have 50, 100, 150,$200, it has a major impact on your bottom line. So we have this thing called the Wealth Builders Matrix. And if you've never seen the Wealth Builders Matrix, it tells you based on how much money you save, what every single dollar is worth based on your age. So in the Wealth Builders Matrix, it's gonna show you the value of every single dollar you invest.

8:05So you'll see that even small amounts of money over time can grow to very large amounts of money. Someone in their mid-20s, every dollar they invest is gonna be worth$70 by the time they retire at age 65. And so this is where it is really, really important to note that small amounts of money can grow to very large amounts of money. So I don't care how much extra you have, you need to take a small portion of that extra and start putting it towards retirement accounts. You will not regret it. I have never heard anybody in their 20s say, man, I really wish I did not save that extra money towards my retirement account.

8:36No, every single time people are happy they did it. Now you can do this a number of different ways. You can do this with your employer match. That is a great way to get some automatic savings because it's going to double up or help you boost those retirement savings. So if you don't know what your employer match is, that is where your employer offers you a match. If you put a certain amount in your 401k, so let's say, for example, you put 3 % into your 401k, then they will also put 3 % up to whatever the employer match is. So check with your HR department, see if they have that employer match.

9:03And then in addition, looking into your Roth IRA or your 401k can be an awesome option. Number two is to automate these contributions. So once you start sending money to your retirement accounts, I want you to automate those contributions to make it seamless, to make it easy, and reduce friction and reduce the willingness on your willpower. What you do not wanna do is have to rely on your willpower to send money every single time. Instead, I want you to send it automatically so you don't even have to think about it. You don't have to lift a finger. You don't have to budget it out. It just happens automatically.

9:33It is by far the best way to do this. Now we have something called the automation checklist. If you've never automated your money before, We have an automation checklist that takes you step by step and teaches you exactly how to automate your money. So we'll link up that down below in the show notes so that you can check out the automation checklist. Number three is to make sure you capture that employer match. So we just talked about this is to capture that employer match because it is free money. It is a 100 % rate of return. So at the bare minimum, no matter what you do, if you're paying off high interest debt, you're trying to save in your emergency fund, all these other things.

10:06you first always want to make sure that you get that employer's match because it is going to be free money and you want to take advantage of that. Also, any high interest debt that you have on hand, we want to make sure that we reduce that high interest debt. So I'm talking any debt above a 6 % interest rate. If you have high interest debt, I need you to knock that down. So if you have credit card debt, that's probably a 20 to 30 % interest rate. That, my friends, is a huge problem. We need to get rid of that as fast as we possibly can. And so once we get rid of that credit card debt, you're going to have extra cash left over that you're going to be able to put towards your emergency fund and towards your retirement accounts.

10:40That's going to be very, very important. Keeping expenses in check is another thing. So a lot of your friends may be going out and having some fun. Maybe they're going on vacations. But what you don't know is when you're in your 20s, a lot of people are making poor financial decisions. And a lot of times, either they're living paycheck to paycheck, and they're spending every single dollar they make, and or they're going into debt with some of these financial decisions. You would be surprised at how many people who are around you that are actually going deeper and deeper into debt every single month.

11:09How do I know? Because they come and have conversations with me saying, I need to get out of this situation. And so really the big, big thing we need to note is that you do not make financial decisions based on the actions of other people around you. I want you to change your mindset and instead focus on the things that you can control. What can you focus on that you can control? You can control your savings rate. You can control how much you earn and the skills that you have. You can control how you spend your money and how you intentionally think about spending your money. All of those are really important ways for you to think about your finances over time.

11:41And then educating yourself. One of the things that we do in Master Money Academy that I absolutely love is we have the high performance book club in there. We are all working on our financial education at the same time together as one community. And so this is something where we are reading through a book every single month. Most people are working through the wealth builders journey and trying to transform their finances. We have index fund pro and all these different things inside of master money Academy that help you through this process. And so it is so cool to see people who are all on the same page, including myself, we're going through these books and reading through them together.

12:12And we all have one common goal, which is financial independence. And that is why I love master money Academy and some of the ways that we are educating ourselves. And you should be doing that to spend time every single week, at least an hour, every single week, educating ourselves on different things that you need to grow on. So maybe that is learning about finance and personal finance, because you're just getting started. Maybe that is learning how to invest. Maybe it is understanding how to automate your money. Or maybe you are trying to increase some of the skills that you have on hand so that you can grow financially.

12:45All of these are wonderful, wonderful things that you need to be doing. But spending an hour every single week focusing on your education is all you need. That is all you need to be able to make a huge impact on your financial life. An hour every week is 365 hours per year. You know how much you can grow in 365 hours per year? An hour per week is 52 hours per year. You know how much you can grow with 52 hours per year of education? Imagine if you did an hour a day, that's 365 hours per year of education. That is going to change your financial life for sure. And then learning how to set goals. So we teach you to set goals in 12 week increments, meaning that the big thing that we want you to do is we want you to achieve those goals quarterly.

13:24What a lot of people do is they do these stretch goals throughout the year. And just a couple months down the line, they never achieve those goals. Well, we teach you to tighten that up. And we want you to be able to achieve those goals very, very specifically over the course of 12 weeks. Now in Master Money Academy, one thing we are doing over the course of the new year is we're going to be going through goal setting strategy sessions with all of our members. And so we're going to be talking through how to set goals, how to make sure you accomplish those goals throughout the next year in 2026.

13:52And it's a really powerful way for most people to learn. This is how you set goals. We have very specific ways that we set them. And so learning how to do that with yourself is also very important. So we're coming up to the end of the year. You guys need to start thinking about your financial goals for next year so that you can accomplish them and start to list some of those out and start to prioritize some of those financial goals. And having those milestones and goals is really important. A great one is to max out some of those retirement accounts because we're looking at the average retirement savings by age here.

14:21And so we want to make sure that we are maxing out those accounts as much as we possibly can. So those are some of the things for folks in their 20s. I highly encourage you to check out because this is going to change your life financially if you can start to overcome some of these hurdles. And learning how to overcome one hurdle at a time is how you get there. This is a long-term process. We're playing the long game here so that we can achieve financial independence and actually accomplish our goals. So that's what I want for each and every single one of you. So making sure we do that is perfect.

14:50Now let's jump into the thirties. So once you hit your thirties, now it's time to get the ball rolling when it comes to your finances and making sure that you actually take advantage of the time that you still have left available so that you can actually retire comfortably. Our entire goal in our thirties is let's strap up. Let's make sure we get as much money as possible into retirement accounts so that that money can grow over time and compounded interest takes over. And so in your 30s, there's a number of things that I want you to do. But first, let's look at the average balances according to fidelity of people in their 30s.

15:24So people age 30 to 34, the average 401k balance is$49 ,000. And people age 35 to 39, the average 401k balance is$85 ,000. So if you are just getting started, that is completely fine. But those benchmarks and those averages are very low in comparison to where you should be. You should have much more in your retirement account than some of those numbers. Now, again, if you're just getting your finances together, you just paid off a ton of debt, you've been working through your 20s trying to figure out what the heck you're even doing with your finances, nothing wrong with that. But if you have been getting your finances together for a certain period of time, and you have a low balance, it's time to crank that up even more.

16:05Now, Fidelity has these benchmarks, and they talk through these different benchmarks stating how much you should have saved up by age. So according to them, by age 35, you should have two times your annual salary saved for retirement. And by age 40, you should have three times your annual salary saved for retirement. And so these are some of the benchmarks that you can look to target. One thing that we talk about a lot is making sure you're on path or in progress to figuring out what is my retirement age or when do I want to retire? And how do I get 25X my annual expenses in order to be able to retire.

16:38That's the 25X rule that we talk about all the time. And so that is really, really important. Now, what are some common challenges for people in the 30s? Because I want to talk through these challenges. And then we're going to go through ways to get over these hurdles for folks in their 30s. Because when you're in your 30s, what happens? This is the messy middle. This is the timeframe where life gets chaotic. It gets hectic. Why? Well, number one, a lot of folks are getting married, or maybe you already were married in your 20s. And so because of that, you're going to have a lot of different life changes?

17:06What do we do with our finances? Do we combine our finances? Do we keep them separate? That is a huge hurdle to overcome in and of itself. Secondly, is a lot of people start to have kids if you didn't start to have kids in your 20s. And so kids are really going to make your life hectic, chaotic. It's awesome, but it's also chaotic. And so you want to make sure that you are planning financially when you have kids. All of this stuff is going to come into play where this in your personal life is going to make everything a little bit more hectic. But guess what? Secondly, is your career is probably starting to take off a little bit and you're making a little more money and you've got to figure out what to do with those dollars and you're trying to balance a number of different things.

17:45Maybe you're trying to buy a house. Maybe you're trying to buy a new car. You're trying to balance your vacation goals. You're trying to balance your retirement goals. You want to save for retirement. All of these different things, trying to juggle them is not easy unless you have a financial plan in place. And in Master Money Academy, that's why we give you that financial roadmap. We give you the exact roadmap that you need in order to make sure that you achieve those financial goals. So let's go through some of these challenges that you're thinking through because this messy lifestyle is something that you can absolutely make clean, neat, and organized where you don't need to have stress around your money.

18:16The last thing you need to focus on is everyday financial decisions. Instead, if you have an automatic system in place, you can achieve so much more. Second thing is major life expenses start to stack up. Maybe you bought a house. Maybe you have a car payment. You have kids. You have daycare costs. Daycare costs are a massive cost for most people in their budget, and not enough people talk about it. If you have young kids and you have to send them to daycare because both the husband and the wife work, well, guess what? Now we have an issue where this is one of our biggest expenses in our budget.

18:48And so because of this, these major life expenses can add up. And in addition, you still have maybe student loans that have carried over and all these different things. Then we have a debt and savings tug of war, meaning that we are trying to figure out how do I pay down debt, but how do I also save enough for retirement? How do I do all of these things? And so really having that financial roadmap in place is very important. Then we think through, well, time, we don't have as much time as we used to. In your 20s, maybe you were single or maybe you just got married and you had a lot more time than you do right now, where time becomes less abundant in your 30s because it gets messy.

19:23And then lastly, if you don't have a plan in place, you're going to be dead in the water. You need to make sure that you have that financial plan in place, step by step, what you need to be doing next. That is the most important thing overall, because once you have a written financial plan, then you'll be able to achieve anything you want to just by following those steps. Now, how do we boost our retirement savings in our 30s? Because we see these averages here by Fidelity. Those are not the averages that we wanna be seeing. And so how do we boost these retirement savings to make sure that you are hitting your retirement goals, hitting that retirement number so that you can achieve financial freedom at some point in time?

19:55Well, number one is we want to prioritize, raising our contribution rate. So every single time you get a raise, for example, we can start and look and increasing that contribution rate every single year. Now, I highly recommend for everybody out there to at least increase how much they are contributing to their retirement accounts by at least the inflation rate. If you're not maxing them out already, at least increase it by the inflation rate. That means you increase the buying power that is going into these retirement accounts, but also that means that you are going to keep up with the purchasing power over time.

20:28So in your 20s, if you started with 5%, for example, you had a really low retirement savings, we need to try to increase that over time. So our minimum that we want you to be saving is 20 % of your income or more. If you wanna be a true wealth builder, it is 20 % of your income or more needs to be going towards wealth building activities. What are wealth building activities? That's going towards your emergency fund and your investment savings. So secondly, is to continue to maximize employer match and get at least up to that match at the bare minimum. So we talked about your employer match in your 20s, but making sure you continue to do that over that time frame.

21:01Number three is maximizing other retirement accounts. So once you start to make more money and in your 30s, your goal should be to increase your income as much as possible, because these are some of the peak earning years that you were going to have your 30s, your 40s and even your early 50s are going to be some of those peak earning years. We need to make sure we are taking advantage of those and throwing chunks of money over to retirement so that compound interest can take over. Compound interest can work so much harder than you can. And so growing the gap is very, very important. And we need to make sure we are looking at that.

21:31Number four is watching out for lifestyle creep. So if you don't know what lifestyle creep is, that is when you get a raise and you spend all of that raise, meaning you increase the amount that you're spending every single month by that given raise. Well, that is a huge problem. And a lot of people start to see lifestyle creep take over in their 30s because of these lifestyle changes. So maybe you bought the bigger house And so your mortgage is much, much higher because you got a raise. And then you get another raise and you buy the fancy car. And then you get another raise and you go on all the fancy vacations every single year.

22:00And it seems to never end. Let me give you a rule that's gonna help you out with this. Instead, I want you to spend some of it on yourself. You worked hard. You deserve to spend a portion of that raise on yourself. But you also need to make sure that you are saving a portion of that raise for your financial future. And so what we're gonna do is the 50-50 rule. save 50 % and spend 50%. So 50 % goes towards whatever you wanna blow it on. If you wanna go blow it on a vacation, if you wanna blow it on a new handbag, if you wanna blow it on some brand new golf clubs to hit it right into the water, you can do that.