Here’s how much of their income the average worker saves for retirement

Finding enough money for retirement savings can be a challenge, but that’s only part of the problem. No one can be sure they are saving enough because they don’t know how long they will live, what their future expenses will be, or how fast their investments will grow. People do their best to make the right assumptions, but sometimes, everyone could use reassurance that they’re on the right track.

One way people often find this reassurance is by comparing themselves to others. But this strategy has limitations that you should be aware of.

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The average 401(k) savings rate is over 14%

Popular retirement advice says it’s a good idea to aim to save at least 15 percent of your annual income each year, and a recent Fidelity study suggests the average saver is pretty close to hitting that level. It evaluated 24 million participants in more than 26,100 corporate 401(k) plans and found that the average savings rate was 14.1%. This rate has remained fairly constant over the past year and has increased by about 0.6% since 2019.

The same survey found that the average employee contribution was $2,560 in the second quarter of 2024. If you apply that average to the full year, you’ll have an annual contribution of $10,240. But about 4 in 5 of those surveyed reported receiving a matching employer contribution as well. The average figure was around 4.8%, with the remaining 9.4% coming from employee contributions.

But there are a lot of variations. Older workers were more likely to set aside larger amounts and receive larger employer matches. Baby boomers fared best, with an overall contribution rate of 17 percent, including employee and employer contributions, compared to just 11 percent of Gen Zers.

What the data doesn’t tell you

You could use the information above as a benchmark to compare how your savings rate compares to other Americans. But there are a few things to keep in mind before doing so.

First, this study looked at 401(k) plan participants. It doesn’t account for workers who don’t have access to a 401(k) or choose to save outside of one. It also doesn’t seem to account for those who are eligible for a 401(k) but can’t afford to participate in one. When these people are taken into account, the average savings rate would probably decrease.

Second, it doesn’t tell you much about a person’s retirement preparation. A 17% contribution rate might be great for a baby boomer who has been able to save regularly throughout their career. But it could be woefully inadequate for someone who wasn’t able to start saving until their mid-50s. Without more data about a person’s financial situation, it’s difficult to tell if they’re an appropriate savings target.

This also means that it’s not that useful to measure your own progress towards retirement. It’s better to build a customized retirement plan where you work toward your own savings goal. Measuring your progress on this will give you a better idea of ​​how you’re doing than comparing yourself to others who may have very different goals and timelines.