How do you compare with the Joneses?
Secretly, most of us wonder how our finances stack up against those of our peers. Recently, Fidelity Investments released its fourth-quarter and year-end 2022 analysis of the state of the more than 43.4 million IRA, 401(k) and 403(b) retirement accounts on the company’s platform.
In doing so, Fidelity offered a glimpse behind the curtain into the finances of four generations of savers. Following is a breakdown of the average 401(k) balances of:
- Baby boomers
- Generation X
- Generation Z
This generation’s average 401(k) balance: $209,000
This generation’s total 401(k) savings rate: 16.5%
Baby boomers have the highest average 401(k) balance of all four generations. That is no surprise, as they have been working longest.
They also put away the largest percentage of their income, possibly because many are still in their peak earning years and may no longer have kids to support or a mortgage to pay.
This generation’s average 401(k) balance: $137,200
This generation’s total 401(k) savings rate: 14.6%
Many members of Generation X are now squarely in their peak earning years, which means they can devote a healthy percentage of their income to building a nest egg.
For more tips about how to increase your savings, check out “5 Effortless Ways to Boost Your Retirement Savings.”
This generation’s average 401(k) balance: $41,200
This generation’s total 401(k) savings rate: 12.6%
There is a substantial drop-off in average retirement savings as you move from Gen X to millennials, but that is somewhat to be expected.
Millennials have yet to take the reins of power — and the high salaries that go with doing so — in many workplaces, although that day is fast approaching.
This generation’s average 401(k) balance: $6,000
This generation’s total 401(k) savings rate: 10.2%
Generation Z is just starting out in adult life so it’s little surprise that they have not accumulated much wealth so far.
However, a closer look at the numbers suggests that Gen Z is actually doing a fine job of saving for their golden years. Their 401(k) balances are up 14% from the fourth quarter of 2021, according to Fidelity, and they are the only generation to boost their balances in the past year.