The Average 401(k) Balance for Americans 70 and Over May Surprise You

One thing all workers today need to do for a comfortable retirement is save for it. That's because most workers -- at least private sector ones -- aren't eligible for a pension to provide guaranteed income for their senior years.

Granted, Social Security does provide guaranteed monthly benefits for those who are eligible. But those benefits will only replace about 40% of an average earner's pre-retirement paycheck. It's important to save independently to have a way to supplement Social Security and avoid financial struggles.

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For workers with access to a 401(k) plan, saving for retirement can be a bit easier than for those without. That's because 401(k)s are funded via automatic payroll deductions. And matching contributions often make it easier for savers with 401(k)s to meet their goals.

But recent Fidelity data reveals that the average 401(k) balance among Americans 70 and older is surprisingly small. If you're edging toward retirement with a similar balance, you may want to make a couple of strategic moves.

What the average older American's 401(k) balance looks like

Last year, Fidelity broke 401(k) balances down by age and found that among Americans 70 or older, the average balance was $250,000.

Interestingly, that's a touch lower than the average $251,400 balance among Americans ages 65 to 69. However, many Americans retire during that window and start to spend their savings. So it stands to reason that by age 70, they'd have a bit less.

Give your 401(k) a late-in-life boost

A $250,000 savings balance is not a particularly large amount, even though it might seem that way on screen. If you're retiring at 70, you may only need your savings to last for 15 to 20 years (though you may live longer). So in that case, instead of following the popular 4% rule, you may instead opt to apply a 5% or even 6% withdrawal rate to your savings.

But at 6%, which some would consider high even for a late retirement, a $250,000 balance only gives you an annual income of $15,000. That's not a lot of money considering that the average retiree on Social Security today collects about $25,000 a year.

If you're nearing retirement and aren't happy with your 401(k) balance, take advantage of catch-up contributions if you can. And if you're between the ages of 60 and 63, you get a super catch-up option this year that allows you to put an extra $11,250 into your 401(k) instead of the regular $8,000 catch-up for workers 50 and older.

Now if you're nearing retirement with a relatively small 401(k) balance, you may not easily have so much money to spare from your paycheck. But it's also not so unusual for people to downsize ahead of retirement and slash their housing costs. Doing so could free up a surprisingly large amount of money for your 401(k), so it's worth running the numbers.

You may also want to consider delaying Social Security if you're not thrilled with the sum you've saved in your 401(k). For each year you wait on benefits past full retirement age, until age 70, your monthly checks get a permanent 8% boost.

All told, the average American 70 and over doesn't have a whole lot of money in a 401(k). Start building your savings early and invest that money strategically. That way, by the time your career nears its end, you'll hopefully have a lot more money to work with.

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