Retirement Savings: Comparing 401(k) Balances Across Industries
When it comes to retirement preparedness, comparing your 401(k) balance with industry averages can provide valuable insights. At Extreme Investor Network, we believe that looking at industry-specific data can help you better gauge how you stack up against your peers in the workforce.
Recent data from Fidelity shows that the average 401(k) balance for plan investors on the platform was $125,900 in the first quarter. However, when broken down by age, the numbers vary significantly. Baby boomers had an average balance of $241,200, Gen X had $178,500, millennials had $59,800, and Gen Z had $11,300.
Industry data can be a more relevant comparison point for workers, as the average 401(k) balance tends to be higher in industries with higher pay. For example, legal services topped the list with a $306,400 average balance, followed by the petrochemical industry at $255,500 and energy production/distribution at $214,400. On the other hand, industries like retail trade, health care (excluding physicians), and real estate had lower average balances.
Rather than focusing solely on account balances, experts recommend looking at the total savings rate to gauge retirement savings success. At Fidelity, the recommended savings rate is 15% of pre-tax income, including employer contributions. Participants had an average total savings rate of 14.2%, the closest it has ever been to the recommended rate.
Industries with the highest total savings rates include pharmaceuticals (19.7%), petrochemicals (19.1%), and airlines (18.4%). On the other hand, industries like retail trade, health care (excluding physicians), construction, and scientific and technical had lower total savings rates.
Employer contributions also play a significant role in retirement savings. The overall average employer contribution rate is 4.8%, with industries like petrochemicals, pharmaceuticals, and airlines offering the highest rates. However, some industries, such as health care (excluding physicians), retail trade, and scientific and technical, have lower employer contribution rates.
It’s essential to note that taking out a 401(k) loan can impact retirement savings progress. Currently, 17.8% of Fidelity’s plan participants have taken out a loan, which can hinder their long-term savings goals.
At Extreme Investor Network, we encourage our members to not only focus on their 401(k) balance but also consider their total savings rate and the overall industry trends. By understanding how your savings measure up against your peers and industry averages, you can make informed decisions to improve your retirement preparedness.