Money Guy Show Average 401(k) Balance by Age (2024 Edition)
Apr 26, 2024
Discover the average 401(k) balance by age and the basics of 401(k) plans, employer matches, and vesting schedules. Learn how many millionaires are created by 401(k)s and get simplified strategies to reach your money goals faster. Explore the benefits of maximizing employer match, understanding fees in 401(k) plans, and maximizing wealth through consistent contributions. Dive into the importance of starting early in 401(k) savings and securing a financially stable future across different age groups.
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Always Capture Employer Match
- Always capture your employer match because it’s effectively an immediate guaranteed return.
- 92% of employers with plans match to some degree, and failing to get the match means leaving 50–100% guaranteed returns on the table.
Vesting Determines What Employer Money You Keep
- Employer contributions can have vesting schedules so not all employer money is immediately yours.
- Employee salary deferrals are 100% vested immediately, but safe harbor, cliff, or graded vesting often apply to employer match, profit sharing, or non-elective contributions.
Pick Roth Or Traditional And Consider Mega Backdoor
- Choose between traditional (pre-tax) and Roth (after-tax) 401(k) contributions based on expected tax rates.
- Roth 401(k)s have no income limit, and after-tax 401(k) plus in-service Roth conversion enables the mega-backdoor Roth when the plan allows it.