A Resource for Facts on America’s Retirement System

Tips for Savers

Americans hold $8.9 trillion in defined contribution retirement plans such as 401(k)s and 403(b)s, and $11.0 trillion in individual retirement accounts (IRAs). Overall, Americans have saved a record amount for retirement—$32 trillion.

Are you part of this robust retirement savings system? The designs and features of today’s plans make it easier than ever to save. Here are a few key steps you can take to make sure you’re on the right track.


Make sure to make sure you’re enrolled. If you’re not sure, ask your employer if they offer a 401(k) plan (or a similar retirement savings plan), and find out what you need to do to enroll.

Max Out the Employer Match

Make sure you’re maxing out any available employer match. Three out of four 401(k) plans include some kind of employer contribution, which is often based on how much the employee contributes. Find out how to get the most out of your plan’s match, so you don’t leave money on the table.

Determine Your Investment Approach

Decide on an investment approach. Some investors want to build their own portfolios and rebalance them over time; some prefer to invest in an option that provides professionally managed asset allocation and automatic rebalancing, such as a target date fund. These funds are diversified, offering a mix of stocks and bonds that is allocated and adjusted depending on the year you expect to retire. Nearly two-thirds of 401(k)s offer target date funds and half of 401(k) investors invest in them.

Preserve Your Nest Egg

Make sure to preserve your nest egg when you change jobs. It can be tempting to cash out your 401(k), especially if your balance is small. But if you do, you may face a major tax bill, including a tax penalty of 10 percent of the taxable portion of the money you withdraw. You’ll also miss out on the power of compound returns that long-term investing provides.

Every person’s situation is different, but you’re likely going to be much better off preserving that retirement accumulation, perhaps by rolling those funds into an IRA. It might also be possible to move them into your new employer’s plan, or leave them in your old employer’s plan.

Stick with It

A lot of investors who are starting out may look at their account balance and get concerned that it seems small. But stick with it—for all age groups, average 401(k) plan account balances increase with time on the job. For example, the average account balance of participants in their sixties with two or fewer years of job tenure is $36,339—but it’s $287,533 for participants in their sixties who have more than 30 years of job tenure.

Contribute Now to Catch Up

Tax law allows those 50 and older to make larger contributions to 401(k)s and IRAs. These “catch up” contributions help those nearing retirement accelerate their savings. For traditional and Roth IRAs, older savers are allowed to contribute an additional $1,000, for an annual limit of $7,000. Eligible 401(k) savers are allowed to contribute an additional $6,000.

Plan Ahead

Everyone juggles competing financial priorities throughout their lives, and planning for retirement is one of those priorities everyone needs to think about. Even many younger Americans, who are perhaps also financing an education or saving for a home, are saving for retirement. More than one-third of 401(k) plan participants are younger than 40, and households across the income spectrum are saving. Fifty-three percent of households that owned defined contribution plan accounts in mid-2017 had incomes below $100,000.

Save for retirement even without a 401(k)

Just because you don’t have access to a workplace retirement plan such as a 401(k) doesn’t mean you can’t save for retirement. Opening an IRA can be a great option. More than one-third of US households have opened IRAs. In fact, assets in IRAs eclipse 401(k) assets, totaling nearly $11 trillion. IRAs are a great tool that offer similar tax advantages as employer-sponsored retirement plans, so if you’re looking to trim your tax bill and save for retirement at the same time, opening and contributing to an IRA is an easy way to do both.