This Is the Average 401(k) Balance for Ages 45 to 54

By the time you reach your mid-40s to mid-50s, you may be in a pretty good position career-wise. At that point, you've probably been working a good number of years, and you may be in a place where you're finally commanding a higher salary.

That doesn't mean your retirement savings are where they need to be, though. The reality is that even with a larger paycheck, you might still be struggling to find the money to fund an IRA or 401(k). That's especially understandable these days given how rampant inflation has been.

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But it's important to get to a good place savings-wise by the time your mid-40s to mid-50s roll around. And data from Vanguard shows that many people that age are behind on 401(k) savings.

What the average American aged 45 to 54 has in a 401(k) today

Vanguard recently shared an update on 401(k) plans, and it found that the average American aged 45 to 54 has a 401(k) balance of $188,643. Now that might read like a decent amount. And it is, technically.

What's a bit more problematic is the median 401(k) balance among Americans aged 45 to 54. According to Vanguard, that's just $67,796.

Now, when you have a median that's way lower than the average, it tends to indicate that the median is the more representative number in that data set. In other words, $67,796 is more reflective of what the typical American in their mid-40s to mid-50s has in their 401(k). And that's not great -- especially for workers at the higher end of that age range.

Let's say you're 54 with $67,796 in your 401(k). Let's also imagine your savings grow at a rate of 8% per year, which is a bit below the stock market's average, and you're able to save $300 a month in your retirement plan between now and age 67.

In that case, you'd be looking at a balance of about $262,000. Using the 4% rule, that allows for an annual retirement income of about $10,480 out of savings.

Meanwhile, the typical retired worker on Social Security today collects a little more than $2,000 a month. With $10,480 from savings, you'd be looking at a little under $2,900 a month in retirement income if your Social Security benefits end up being comparable. If that doesn't sound wonderful to you, and your 401(k) balance needs a boost, then it's important to take action immediately.

Take steps to grow your 401(k)

If you're in your mid-40s to mid-50s and you feel that your 401(k) needs work, the good news is that you still have some time to boost it. This especially holds true if you're on the lower end of that age range.

A good place to start is assessing your spending and making adjustments to free up more money for savings. That doesn't mean you should cut out every single fun expense in your budget. Rather, it means you should spend on extras more mindfully -- for example, perhaps stick to one streaming service a month instead of three.

Next, you may want to look to the gig economy for extra income if you aren't able to contribute enough to your 401(k) to make good enough progress. Earning a side income could also help take the pressure off your paycheck at a time when costs are high. Plus, it could make it possible to claim your full 401(k) match for additional money.

Finally, make sure you're investing your 401(k) strategically. If you're investing it in a target date fund, you may be paying higher fees than you need to for lackluster returns. Consider moving into a low-cost index fund instead.

If you're between the ages of 45 and 54, it's time to get serious about retirement savings. That could mean taking steps to boost your 401(k) if your balance is similar to the median, or even average, amount for your age range.

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