Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

What's The Average 401(k) Balance At My Age? Am I On Track?

• Ari Taublieb, CFP®, MBA • Episode 273

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Think you know how much people save for retirement?

The median American over 65 has just $100,000 saved, yet the average household spends $57,000 a year in retirement, with $20,000 going to housing alone. The math doesn’t work.

At Root Financial, most clients retire with $2–3M and plan to spend $100K–$200K annually. That’s not about bragging. It’s a reminder that if you’re here, you’re likely already thinking beyond the basics.

Rules like “save 10%” or “withdraw 3%” don’t fit everyone. The difference between struggling and thriving often comes down to advanced planning—tax strategy, investment allocation, Roth conversions, and estate design. For many, the real risk isn’t running out of money, it’s missing opportunities out of excessive caution.

Know where you stand relative to the averages and to your own vision.

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Advisory services are offered through Root Financial Partners, LLC, an SEC-registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. Viewing this content does not create an advisory relationship. We do not provide tax preparation or legal services. Always consult an investment, tax or legal professional regarding your specific situation.

The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.

Comments reflect the views of individual users and do not necessarily represent the views of Root Financial. They are not verified, may not be accurate, and should not be considered testimonials or endorsements

Participation in the Retirement Planning Academy or Early Retirement Academy does not create an advisory relationship with Root Financial. These programs are educational in nature and are not a substitute for personalized financial advice. Advisory services are offered only under a written agreement with Root Financial.

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Ari Taublieb, CFP ®, MBA is the Chief Growth Officer of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.


Speaker 1:

I went ahead and asked ChatGPT what's the average retirement account balance by age, and the results are surprising. Now I know you could all look this up in 10 seconds, so that's not rocket science. I'm going to give you my insight on this because there are some things that I think will surprise you. My name is Ari Taublieb. I am a certified financial planner, host of this podcast, the Early Retirement Podcast, and Chief Growth Officer at root financial, where we help people optimize what they've worked so hard for and get the most life out of their money, especially around an early retirement in most cases. So, with this being said, I'm going to go ahead and just read what is literally the different account balances by age and then give you some surprising statistics here, in addition to my insight from our clients who are here at Root Financial. So I'm going to go ahead and read this list here. You can see it on my screen if you're watching on YouTube. So, for those under 25, average balance is 6,300. The median balance is 1,400. A kind reminder for all of you. I'm putting you back to high school, real quick. Average is skewed by those high balance savers. The median shows what a typical saver has. So if you remember median going back to school, remember you'd cross out kind of the sides, then eventually get to the middle versus average is where you take it all and then divide it. This is why median is more appropriate. Is the median From 35 to 44, 97,000 is the average, 36,000 is the median From 45 to 54 years old 179,000 is the average, 61,000 is the median. From 55 to 64, 256,000 is the average and 89,000 is the median. And above 65, we're at 280,000 average, 100,000 median. Wow, wow, wow. Why is this surprising? I bet this is not most of you, which is pretty wild. Because then I went ahead and I needed to ask Jachie PT. I said okay, give me how much the average retiree spends, and this is very different from what our clients spend. So let me be clear and I will give you both of those answers. So I'm going to go ahead and read this out.

Speaker 1:

This comes from the BLS Consumer Expenditure Survey, which is average spending per retiree household is about $57,000 per year. Now it doesn't clarify if that's after taxes, adjusted for inflation, all that good stuff, but I'm going to assume it is here. And they talk about housing being about $20,000 or 35% per year. Transportation 7,000. Healthcare 7,000. Food 7,000. Entertainment 3,500. Insurance, pension stuff, 3,300. And then other clothing or personal care 8,500. And that's for couples. They're saying couples is about that uh 57,000 to 75,000 and singles are 35 to 45,000. And of course that can vary. Now those are all the statistics from chat GPT.

Speaker 1:

Now let me tell you real life. Okay, average root client who we're working with, they're in that range of two to $3 million. Client who we're working with they're in that range of two to $3 million. Now there's clients with 20, $30 million and there's clients with 500,000 to a million dollars. There's a range. But most of the people that we're working with they've got two to 3 million bucks. They've saved and invested really well and they want to spend anywhere from a hundred to $200,000 per year, adjusted for inflation, after taxes.

Speaker 1:

Now why do I share that? Because that's completely different from the numbers I just told you. And I'm not saying that because I'm trying to tell you how great Root is or anything like that. I'm telling you this because I don't want you to feel like you're in the wrong box by any means. If you're listening to this going, wow, I've only got two $300,000, I bet you're not thinking about retirement. So when I'm seeing these numbers here. These are surprising to me. When I'm looking at an average of people who are above 65 have $280,000, I know that's what the stats show. So I'm not you know, this comes from Vanguard and Fidelity. I'm not doubting that. I'm saying that's not most of you watching this, that's not most of you listening to this. So, because of that, the content that I'm talking about really doesn't apply to those people and it probably applies to more of you who are listening going. Yeah, I've actually saved and invested really well.

Speaker 1:

I'm wondering should I do Roth conversions? I'm wondering if I retire before 65, is healthcare going to cost me a thousand a month? Is it going to cost me 20 bucks a month if I'm smart? I'm wondering do I need In the future, when I have those required distributions? Are my children going to get taxed like crazy? Or is my spouse going to have to pay crazy taxes if I were to pass away? And with our different age gaps, how does that impact the plan? And how do we make sure that I'm on track for my retirement spending in those go-go years when we have our energy and health and we want to spend way more? That's who I'm talking to. So by no means am I trying to say I'm not trying to help people who have $200,000 or $300,000 unless they don't like soccer, then I'll never help them. No, I'm just kidding. I'm just a big soccer guy.

Speaker 1:

My favorite team's Arsenal. For those who do not know, so I got to play at Arsenal. Because of all of you who listen to the podcast and watch on YouTube you are know it or not to help send me to go play at Arsenal. So that was a legendary experience earlier this year. So thank you for that.

Speaker 1:

Now I'm telling you this because what I love talking about is not what's most talked about in finance. If you're looking up financial tips, it'll say here's the best new credit card, here's how you can travel hack and here's why you need to make sure you use this credit union. Those things are all fine. Okay, I'll be honest, I don't care about them that much. I'm just being totally honest with you. I don't think they really hold the same weight.

Speaker 1:

If you're thinking about investing well and I've made this case many times I've had people who come to me and there's like I got to make sure I'm saving the right way and I'll say you need to invest better at your stage of life. If you have a million dollars and you're 55 and most of your money is in super conservative assets and you're getting 2% growth, or $20,000 a year, versus getting 10% growth at 100,000 per year, that's way more valuable than you trying to save or max out your 401k and put 30,000 in your account. It's the exact opposite. When you're early on in your career, when you're 20 years old, I want you to max out your 401k because if you get a 10% return on a thousand dollars, that's a hundred bucks. That doesn't really change your financial strategy. So, investing the right way, understanding how much should be in dividend paying companies, how much should be in small caps or international or real estate or value that's where there's a ton of value. Tax planning, roth conversions, estate planning, insurance I need to protect against what you've worked so hard to accumulate.

Speaker 1:

You're entering a different ball game. If you've just had the S&P 500, as an example, it's pretty simple you add more money to the S&P 500, then eventually you retire and I see people who just have the S&P 500. And I see people who just have the S&P 500. And I see people who have to go back to work and you don't want to be those people. And what happens in those cases are people. They're continuing to have what's worked well for them so far.

Speaker 1:

So, for example, pretend you're a great saver and that's more or less your identity a little bit at this point. You're a great saver, you might stay a great saver in retirement and you also might pass away with $10 million if you do that. So my job is to come in and say, hey, maybe it's time to spend a little bit more, not frivolous, don't just spend for the sake of it. But here's the position you're in. You're in a great spot. I don't want you mad at me when you're 75 with $5 million. On the flip side, there are cases where I will be the mean advisor that says look, I promise, not mean, just transparent to say I don't want you to run out of money. So I know you don't love your current role. I need you to work two more years because then we're in a good spot. Or I need you to work three more years because if not, you want to travel, have healthcare, do a home remodel and pay for your kid's college. Yes, your retirement looks good long-term, but in the short term it's going to put too much pressure on your portfolio if markets don't do well. So it's giving the confidence to a client to retire knowing they didn't miss something. There was nothing that they overlooked.

Speaker 1:

So are these average accounts and balance and spending good to hear? Yes, maybe it's a little bit of an ego boost and there's nothing wrong with that. If you're like, hey, wow, I'm way above the average. But then we want to make sure we're kind of bring that back to real life. And some of you are in the sweet spot. You're like I have 2 million bucks and I want to spend 4,000 a month. That's awesome. I would have no idea why you're working unless you really love it. Other people are like you know. I saw that. I just heard you say the average balance of you know, 65 is 280,000. But to be honest, I don't know how anyone could retire on that. I live in California. 280,000 is like one good year. Like I pay my mortgage, I travel, kids are in college, I bought a new car and like we're right there, and that's true, and I see a lot of couples in those cases as well. So averages are good.

Speaker 1:

They're not what I would rely on. In the same way, I don't rely on percentages, like people often talk about. Make sure to save 10% of your income. Hey, that's a nice rule because it gets people to take action. But if you make $50,000 a year and you save 10% of your income, you're likely not retiring early. So that's different. Versus if you make a million a year, save 10%, you might over-save for retirement. So all of the content I'll always make is super, super dialed for tax planning, estate planning, withdrawal strategy, income investing. That's where I find a lot of the weight is held. That changes your retirement in a big way.

Speaker 1:

Not saying there's people out there who don't do the credit card hacking. Well, and the travel and use the points. And you know I try. You know I do a very bad job at that, I'll admit, because I just don't care about it that much. I would rather spend my time focusing on my business or spending time making a new video, because I just enjoy that way more. But I know everyone's different. So by no means am I saying credit cards are evil or anything like that. But that is not changing your retirement. It's these other things that hold way more weight.

Speaker 1:

And if you're wondering, hey, am I in a good spot? You know there's tons of different rules out there. Some people are saying you should have one make sure to save three times your salary by age 40, or six times by age 50, or 10 times by 67. There's other people that I've heard who say, hey, if you want to make sure that you never run out of money, well, the biggest thing you can do is just don't withdraw ever more than 3% of your portfolio. You could do that, you could absolutely do that, but you'll probably look back on why didn't I spend more? The bigger risk there is you look back with regret going I could have lived a more full life. Now, money doesn't only add to a full life, but there are things where you would go. Money would create more fulfillment and purpose because I could spend more time with who I care about most, and that's what I want to do.

Speaker 1:

So hopefully maybe an informative episode, more of a gut check that you might go wow, I'm in a pretty good spot compared to the average retiree, but it doesn't mean I'm on track for my own retirement. So I encourage everyone if you haven't already used the early retirement academy, to go play around with your own numbers, your own software, that you can go. It's not your software, but you will be able to use it. It is software so that you can go play around, run. What if scenarios see what you're on track for and when you're in a position to retire with confidence, then, finally, if you wanna work with us here at Root Financial, this is what we love to do. We help clients optimize what they've worked so hard for so they can get the most life out of their money. I'll see you guys next time.

Speaker 1:

Thank you all, as always, for listening to the Early Retirement Podcast. I love getting to host these shows and make different content for you guys every single week. I've not missed a single week in years and that is because I love getting to do this. Now, please be smart about this. Before you actually execute any strategy that you see me talk about or hear me talk about, should I say please talk to your financial advisor, your tax preparer, your estate attorney, please be smart about this. None of this should be construed as financial advice. This is for fun, educational, informational purposes only. Once again, just quick disclaimer here. Guys, please be smart about this. Appreciate you listening, as always, and you can, of course, submit a question on my website, earlyretirementpodcastcom, if you, of course, want me to address a specific case study or topic. I will not promise I can get to it, but I respond to every single person and if I find it will be helpful for a lot of people, I will absolutely make an episode on it, at the very least give you some insight. That's it, thanks guys.