How Much Have Millennials Really Accumulated in Their 401(k) Accounts, and Why This Is Important

Millennial Retirement Savings: A Closer Look

Image credit: HEX / Getty Images

When examining the average retirement savings for millennials, it's important to recognize the diversity within this age group. By 2025, millennials will range from 29 to 44 years old, meaning some are just beginning their professional journeys while others are nearing midlife.

Main Insights

• Fidelity reports that millennials (ages 29-44) held an average 401(k) balance of $67,300 in 2024, with an average contribution rate of 8.7%—the second-lowest among all generations.
• According to the Transamerica Center for Retirement Studies, the median retirement savings for millennials is $65,000, indicating that half of this group has saved less than that amount.
• In 2024, a significant number of millennials increased their retirement contributions.

Fidelity’s data shows the typical millennial has set aside around $67,300 for retirement. While this may seem low compared to Gen X’s $192,300 or baby boomers’ $249,300, it’s important to remember that older generations have had more time to accumulate savings.

On a brighter note, millennials’ total contribution rates (including employer matches) average about 13.3%, which is close to the 15% recommended by financial experts. Nearly 40% of millennials boosted their contributions last year. Despite facing economic turbulence, this generation is making progress—though it remains to be seen if this momentum can withstand ongoing economic uncertainty.

Understanding the Numbers: What Averages Reveal and Conceal

Average figures can be misleading, as they hide the wide range of savings among millennials. For instance, Vanguard’s 2024 research found that those aged 25-34 had an average of $42,640 in their defined contribution plans, while those aged 35-44 averaged $103,552.

The median savings, which isn’t skewed by a few high earners, paints a more modest picture. Vanguard reports a median of $39,958 for the 35-44 age group, suggesting that a handful of large accounts are inflating the average. Transamerica’s focus on middle-income Americans found the median millennial retirement savings to be $65,000, meaning half of millennials have saved less than that.

Why Millennials Are Catching Up

If you feel your savings are lagging, you’re not alone—and there are reasons for this. The oldest millennials entered the job market around 2003, only to be hit by the Great Recession soon after. During that period, over 15% of millennials were unemployed, and many who remained employed saw little to no wage growth for years.

Additionally, the student debt crisis was escalating just as millennials were entering adulthood. Millennials now carry about 40% of all student debt, and many prioritized repaying loans over saving for retirement. The pandemic brought further setbacks, with some millennials withdrawing from their 401(k)s during layoffs and others pausing contributions altogether.

Strategies to Boost Your Retirement Savings

Even if you’re behind on your retirement goals, there’s still time to catch up. It’s not just about saving more, but also about saving smarter. For example, nearly one in five (18.3%) millennial savers now use Roth 401(k)s, which allow for tax-free withdrawals in retirement—a smart move for those expecting to be in a higher tax bracket later.

Fidelity recommends having about three times your annual salary saved by age 40. If you’re not there yet, increasing your contribution rate by just 1% each year can have a big impact over time, especially since retirement is still decades away for most millennials.

Don’t overlook employer matching contributions—they can provide an immediate 50% or 100% return on your savings, depending on your plan. Review your benefits to ensure you’re not missing out on this valuable opportunity.

Final Thoughts

If your retirement savings feel insufficient, remember you’re not alone. Millennials have faced unique challenges: launching careers during a recession, shouldering unprecedented student debt, and navigating a pandemic during prime earning years.

You can make meaningful progress by maximizing employer matches, gradually increasing your contributions, and letting compound growth work in your favor. While many millennials started with setbacks, there’s still plenty of time—20 to 35 years—for your retirement savings to grow.

Read the original article on Investopedia.