If you make a lot of money, you should be able to save for retirement pretty easily. However, you’re also going to need to save more than those who earn less. There are a few reasons for that.
Social Security is progressive and replaces less of your earnings if you are a high earner. You probably are also used to a nice living standard if you earn a lot, and won’t want to downgrade substantially as a retiree.
Since your income affects the amount you can invest in a 401(k) or IRA at a brokerage firm, it’s helpful to understand how your 401(k) plan balance compares to others in your income group. Here’s what you need to know in order to do that.
This is how much Americans of every age have in their 401(k)
Data from Vanguard’s “How America Saves 2024” report shows how much people have in their 401(k) based on where they fall within different income ranges.
The table below shows typical balances by income, so you can see whether you have more, less, or around the same savings as your peers.
| Income | Average 401(k) balance | Median 401(k) balance |
|---|---|---|
| Under $15,000 | $24,175 | $3,691 |
| $15,000 to $29,999 | $18,610 | $6,142 |
| $30,000 to $49,999 | $25,096 | $10,072 |
| $50,0000 to $74,999 | $59,273 | $24,939 |
| $75,000 to $99,999 | $106,875 | $51,073 |
| $100,000 to $149,999 | $178,818 | $91,323 |
| $150,000 and up | $336,470 | $188,678 |
Data source: How America Saves 2024 Report, table by author.
Both median and average balances are higher for those with higher incomes, but generally still fall short of the recommended amount of savings. Experts recommend replacing around 10 to 12 times your final income upon retirement, so those with $150,000 annual incomes would need at least $1.5 million invested.
With the median balance at just $188,678 for that income group, they have a long way to go.
Growing your retirement nest egg is crucial regardless of income
As this data shows, saving enough for retirement is hard for everyone, even though higher earners are doing better at it. No matter your income, though, here’s what to do to ensure you end up with the nest egg you need.
Take full advantage of your employer match
If your company provides matching contributions, be sure to invest enough to earn the entire amount of free money the business is willing to provide. Many companies match contributions as a percentage of salary, so high earners who max out their matching funds can earn a lot this way.
Increase investments over time
Ideally, you’ll save at least 15% or so of your income in your 401(k), but it’s not always possible to do that and still keep any money in your bank account to pay your bills. If you need to, start slow with your investments and then gradually increase them. If you get a 2% raise, for example, you could add 1% or 2% to your retirement account contributions before you get used to spending the money.
Pick the right investments
Often, 401(k) plans have a limited range of investments, and some options have higher fees than others. Be sure to research the past successes and the expense ratios of any investment you may buy.
By taking these steps, you may be able to increase your retirement savings balance so you find yourself with plenty of money in your golden years — no matter your income during your working life.
