Any specialist in the field of mental health will tell you that it is detrimental to your mental well-being to evaluate yourself about others constantly. On the other hand, when it comes to retirement savings, it might be helpful to understand what other people do.

Finding out how others are preparing for their post-career days or not planning at all may provide a baseline for goal-setting and milestone-setting, making it easier to determine just how much money you'll need for your post-career days.

401(k) Account Values Broken Down by Generation

The encouraging news is that people in the United States have been making more effort to save money. The average balance in 401(k) plans hit $112,300 in the fourth quarter of 2019, as reported by Fidelity Investments, a financial services company that manages more than $9.8 trillion in assets. This is a 17 percent increase from $95,600 in the fourth quarter of 2018.

Ages 20 to 29

• Average 401(k) balance: $10,500
• The contribution rate (as a percentage of total income) is 7%

Ages 30 to 39

• Average 401(k) balance: $38,400
• The contribution rate (as a percentage of total income) is 8%

Compared to the previous quarter, the number of contributions made to IRAs by millennials (defined by Fidelity as those born between 1981 and 1996) climbed by 21 percent. This generation made contributions to IRAs totaling around $373 million, a 46 percent increase over the prior year's fourth quarter contributions. Most millennials—73 percent—donations were made to Roth IRAs.

Ages 40 to 49

• Average 401(k) balance: $93,400
• The contribution rate (as a percentage of total income) is 8%

The significant increase in the account balance size for members of Generation X may be a reflection of the fact that members of this generation have racked up a solid couple of decades in the job and have been contributing to plans for that time. Many people may be in their prime earning years, which is reflected in the higher contribution rate.

Ages 50 to 59

• Average 401(k) balance: $160,000
• The contribution rate (as a percentage of total income) is 10%

The surge in the contribution rate for this cohort suggests that many are taking advantage of the catch-up option for 401(k)s, which enables individuals aged 50 and older to deposit more than the usual amount (an additional $6,500 in 2022).

Ages 60 to 69

• Average 401(k) balance: $182,100
• The contribution rate (as a percentage of total income) is 11%

For this particular population, the time to start saving is now or never. The high contribution rate shows that a significant number of baby boomers are maintaining their employment status throughout this decade of their life.

Ages 70 to 79

• Average 401(k) balance: $171,400
• The contribution rate (as a percentage of total income) is 12%

By the Further Consolidated Appropriations Act, the age restriction that prevented those aged 7012 or over from contributing to conventional IRAs will no longer be in effect as of January 2020. Those who are already employed or who manage their own company have access to a new savings opportunity for retirement as a result of this development. The world we live in now is quite different from the one that existed a few decades ago. It is unknown how the financial repercussions of the COVID-19 epidemic will influence the capacity of different generations to save money aside for their retirement.

How Much Money Will You Need To Retire Comfortably?

The amount of money you'll need to retire successfully will vary from person to person based on several criteria like how long you anticipate living, where you reside, and the investment returns you anticipate earning. Because these are the charges you'll need to meet throughout retirement with your savings, estimating your yearly expenses is an important step in determining how much money you'll need.

How much money do you need to put aside monthly to cover your expenses? Double this number by 12 to get an estimate for each year, and then multiply the sum you get by 30 just in case you live another 30 years. This estimation of your future requirements is approximate and does not consider the profits on your investments or the inflation rate; nonetheless, it provides a reasonable estimate of those requirements. Make sure that your computation takes into account the cost of medical treatment.

The four percent rule is yet another well-known calculation technique. To ensure that your savings will be sufficient for the length of your retirement, this strategy recommends taking out no more than 4% of the total value of your retirement account during any given year. Although some financial counselors believe this strategy is not sufficiently cautious, using it as a starting point for estimating the amount of money you will need to set aside might be helpful. To calculate the number of funds, you'll need over the next 25 years, multiply the amount you'll need each year by 25.