Last year was a banner year for retirement savings: Individuals with retirement accounts broke new savings records, according to Vanguard.
In fact, the average Vanguard account balance for defined contribution plan participants—which include those who can contribute to a 401(k) or 403(b), among other types of accounts, at work—hit $141,542 in 2021, according to Vanguard’s annual How America Saves report for 2022.
That said, the figure is skewed by a small number of “longer-tenured, more affluent, or older” accounts. The median was $35,345, which more closely represents the typical saver, Vanguard says. Three in 10 participants had an account balance of less than $10,000 in 2021, while 3 in 10 also had balances of more than $100,000.
These balances vary depending on income and savings rate, of course, but also time in the market. Gender and industry are also important factors, says Vanguard.
The company credits the record-breaking savings to features like automatic enrollment in retirement plans and automatic contribution escalation. It also notes that average balances increased 10% compared to 2020, thanks to a soaring stock market in 2021. Those record-breaking gains might not be repeated this year, given the current state of the market.
Automating participation in savings plans, rather than waiting for individuals to contribute or increase their savings rate on their own, has been shown to be one of the best tools to increase retirement savings. Congress is currently working on a bill that would mandate automatic enrollment for all but the smallest employers.
Of course, not everyone has access to a workplace retirement plan. Traditional and Roth IRAs can help make up some ground, but they have lower annual contribution limits, so they are not a 1:1 replacement for 401(k)s.
The ideal retirement savings rate is 12% to 15% of your annual income (that includes an employer contribution, if you get one), according to Vanguard. The average deferral rate for Vanguard savers was 7.3% in 2021, and 11.2% when the employer contribution was taken into account. But even if you can only save a little bit each year, that’s better than nothing. Start small and you can build over time.
Financial planners are split on how much people will need saved to live comfortably in retirement, and of course the exact number will vary greatly depending on your lifestyle and other needs you might have in your nonworking years. Some put the number at $3 million, while many put it much lower.
Here are the average and median 401(k) or 403(b) account balances by age in 2021, according to Vanguard.
Average 401(k) or 403(b) account balance in 2021: $6,264
Median 401(k) or 403(b) account balance in 2021: $1,786
25 to 34
Average 401(k) or 403(b) account balance in 2021: $37,211
Median 401(k) or 403(b) account balance in 2021: $14,068
35 to 44
Average 401(k) or 403(b) account balance in 2021: $97,020
Median 401(k) or 403(b) account balance in 2021: $36,117
45 to 54
Average 401(k) or 403(b) account balance in 2021: $179,200
Median 401(k) or 403(b) account balance in 2021: $61,530
55 to 64
Average 401(k) or 403(b) account balance in 2021: $256,244
Median 401(k) or 403(b) account balance in 2021: $89,716
65 and up
Average 401(k) or 403(b) account balance in 2021: $279,997
Median 401(k) or 403(b) account balance in 2021: $87,725
This story was originally featured on Fortune.com
BofA Securities maintains Amazon.com at ‘buy’ with a price target of $154.00
Six people in critical condition, one still missing after Paris blast – prosecutor
© Reuters. French firefighters and rescue forces work after several buildings on fire following a gas explosion in the fifth arrondissement of Paris, France, June 21, 2023. REUTERS/Gonzalo Fuentes
PARIS (Reuters) – Six people remained in a critical condition and one person was believed still missing on Thursday, one day after a blast ripped through a street near Paris’ historic Latin Quarter, the city’s public prosecution office said. “These figures may still change,” prosecutor Maylis De Roeck told Reuters in a text message, adding that around 50 people had been injured in the blast, which set buildings ablaze and caused the front of one to collapse onto the street. Of two people initially believed missing, one has been found in hospital and is being taken care of, the prosecutor said, adding: “Searches are ongoing to find the second person.” Authorities have not yet said what caused the explosion, which witnesses said had followed a strong smell of gas at the site. The explosion led to scenes of chaos and destruction in the historic Rue Saint Jacques, which runs from the Notre-Dame de Paris Cathedral to the Sorbonne University, just as people were heading home from work. It also destroyed the facade of a building housing the Paris American Academy design school popular with foreign students. Florence Berthout, mayor of the Paris district where the blast occurred, said 12 students who should have been in the academy’s classrooms at the time had fortunately gone to visit an exhibition with their teacher.
“Otherwise the (death toll) could have been absolutely horrific,” Berthout told BFM TV. She said three children who had been passing by at the time were among the injured, although their lives were not in danger.
4 big analyst cuts: Alcoa & DigitalOcean shares drop on downgrades
Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Alcoa, DigitalOcean, Teleflex, and Xcel Energy.InvestingPro subscribers got this news in rapid fire. Never be left in the dust again.Alcoa stock drops on Morgan Stanley downgrade Alcoa (NYSE:) shares fell more than 3% pre-market today after Morgan Stanley downgraded the company to Underweight from Equalweight and cut its price target to $33.00 from $43.00, as reported in real time on InvestingPro.The firm sees a significant decline in consensus estimates, and as negative earnings revisions materialize, it believes the stock will face downward pressure and underperform.The analyst’s estimates for EBITDA in Q2, 2023, and 2024 are substantially lower than the consensus. The stock is currently trading above its historical average. The firm said its downward revisions in earnings estimates and price target are attributed to the company’s high operating leverage to aluminum prices.DigitalOcean stock plunges on downgradePiper Sandler downgraded DigitalOcean (NYSE:) to Underweight from Neutral with a price target of $35.00. As a result, shares plunged more than 5% pre-market today.The company reported its last month, with revenue beating the consensus estimate, while EPS coming in worse than expected. Furthermore, the company provided a strong outlook, which was above the Street estimates.2 more downgradesTeleflex (NYSE:) shares fell more than 3% yesterday after Needham downgraded the company to Hold from Buy, noting that UroLift expectations may still be too high.According to Needham, their checks indicate that urologists are reducing their use of UroLift due to its retreatment rates, reimbursement cuts, and increasing use of competing procedures. This is also supported by their Google Trends data analysis, which indicates decreasing search interest in UroLift.BMO Capital downgraded Xcel Energy (NASDAQ:) to Market Perform from Outperform and cut its price target to $64.00 from $69.00 to reflect the lower-than-expected terms of the company’s regulatory settlement in Colorado.Amid whipsaw markets and a slew of critical headlines, seize on the right timing to protect your profits: Always be the first to know with InvestingPro.Start your free 7-day trial now.
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