Vanguard Released Data on 5 Million 401k Investors

Vanguard released its yearly report on how America saves. This report looked at 5 million of their 401k investors to reveal many interesting facts about how much they save for retirement, the average 401k account balances, how much money they invest, what they invest their money into, and much more. In this video, I'll go through the most different sections of this report to pull some key data that will interest other investors.

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As individuals progress through different stages of their careers and income levels, their 401(k) balances tend to exhibit distinct patterns. In general, younger individuals with lower incomes may have smaller 401(k) balances due to the relatively shorter time they've been contributing and the challenges of saving amid lower wages. However, as they age and their incomes increase, they have more opportunities to bolster their retirement savings, resulting in a gradual growth of their 401(k) balances. On the other hand, older individuals with higher incomes often have larger 401(k) balances, thanks to extended periods of contributing and the ability to save more from higher earnings. Nevertheless, individual circumstances, market fluctuations, and financial decisions all play significant roles in shaping 401(k) balances, making it crucial for people of all ages and income levels to adopt prudent retirement planning strategies.

The savings rates in 401(k) accounts often vary significantly based on age and income levels. Younger individuals, especially those in their 20s and 30s, tend to have lower savings rates as they may prioritize other financial goals like paying off student loans or saving for a down payment on a house. As individuals reach their 40s and 50s, their savings rates in 401(k) accounts generally increase as retirement becomes a more immediate concern. Higher-income earners typically have the capacity to contribute more to their 401(k) accounts and may take advantage of employer matching contributions. On the other hand, lower-income earners may face challenges in allocating more funds toward retirement due to essential living expenses. To bridge the retirement savings gap across different age and income groups, financial education and policies promoting retirement saving incentives can play a crucial role in fostering a secure financial future for all individuals.

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Disclaimer: This video is for entertainment purposes only. Everyone's situation is different so do your own research before making any decisions with your money.

[brianadams]

Currently putting 20% in my wife's 401k started 2 years ago at age 40 also putting 5% into my roth 401k which just started in july I'm currently 52 years old we started late but at least we started her income is 68k mine is at 75k soon to be 80k. Those are our numbers.

[exgamer]

Great content. Biggest issue with 401k averages/median figures is that many people not only have other accounts at other brokerages, but even having more than one at the same (Vanguard e.g) will give false understated calculation of what one person has saved. A person with two 50k accounts at vanguard will average at 50k instead of showing the true 100k sum.

[akin]

Good seeing Gen Z investing more. I also think YouTube videos, like this, help motivate younger adults to invest more than ever before.

Also, I'm not a fan of Target Date funds for investing. However, it is better than not investing at all. Like a homeless person eating bland food at a shelter is better than starving to death.

[jameswilkerson]

I'm 45 with 650k saved between roth ira, roth 401k, and traditional 401k. Make about 100k . I save 22% of my base salary in a roth 401k and I get an 18% match and contribution. Been at same employer 21 years.

[Daniel-iyzy]

Why would you say “leaked, ” as if vanguard were the victim of some massive cyber crime?

[jhors]

Thank you for posting this helpful video

[JFreeUNC]

I have half in Vanguard and half in Fidelity. They have no way to know how many people have multiple accounts, which I suspect is many.

[KatelynCate]

Just to add to the discussion at 3:38 . It's generally a good idea to keep 1-3Y of living expenses in cash or cash equivalents after retiring. Think of it like the retirement version of the emergency fund. This is what you drawdown during bear markets to help mitigate sequence of returns risk and protect overall net worth. Most bear markets don't last more than ~1Y and even the longest on record was just 21 months, but some super risk-averse people still like to keep 3Y in cash if they can as a black swan hedge. I'm not saying that's wise, but 1Y worth of funds is almost always a good idea if a retiree can afford it.

[charlesrichardson]

Tons of information! I will have to watch at least twice.

To amplify your point on the younger people increasing their investments by 1%, that 1% is just as powerful as saving 1% on fees (Vanguard!!!) over the lifetime of your investing! Add the extra $ with employer match, if available, and the amplification over 40 years is staggering... in a good way! (Jarrad, I know you know that because you basically say this is most of your videos. I just want to add my voice to your message!)

[Justmylukc]

I started late so within all my accounts i invest 30 percent of my pay.

[lyarcadia]

One thing about changing jobs is that some employers will require you to stay with them for at least 3-5 years in order to get the employer matched 401k contributions and pension.people frequently switch jobs can lose too much of that part of their money

[FredrickMoss]

Tbh I think this is a Non-issue, I have 3 different 401k accounts from 3 different providers. I got almost 120k in retirement accounts but not more than 50 in any individual one.

[nescafeshorts]

Finally, someone who shows what is really going on out there

[vansicklejerry]

My wife and I have never had an employer that used Vanguard. All of them were Fidelity. That being said, changing employers had us rolling the 401k or 403B into our IRAs. My wife just changed jobs again 1.5 years ago so now her Rollover IRA has about $200k, but her 401k only has about $50k in there. Maxing it out and now that she's 50 we can put more in.

[toddhallam]

I put 6% in my 401K just to get the match. The rest goes in Roth.

[Ddd-crcn]

Cant start soon enough! I have my 14yr old kid's in a custodial via mega cap by vanguard at $100 per week for another 40 yrs. There biggest problems will be which island to winter on!!! I wish i had a dad like me😂

[TripSoul]

My 401K balance 1.5X median of age group I am in, upper 30s. Largest retirement amount is my total 401K which I contribute 20-25% income towards.

[superjock]

Great video!

Question for you - i am in a first time position this year where i am about to max out my 401k and i will make to much for a roth ira. My company does not allow me to contribute after i max out 401k so i cant do a backdoor. Any suggestions?

[TheTexasTodd]

What about folks that have several 401ks with different brokerage companies?

[HowardAbraham]

Handheld jiggly cam is always a bad idea.