The Average 401(k) Balance for Americans Ages 65 to 69 May Surprise You

If you're approaching retirement, you've probably wondered whether you've saved enough. While everyone's situation is different, it can be helpful to see how your nest egg compares to those of other Americans.

The average 401(k) balance for workers ages 65 to 69 is $258,800, according to Fidelity. At first glance, that may sound like a healthy amount of money. But once you translate that balance into annual retirement income, the picture changes considerably.

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If your retirement savings look similar, it's worth understanding what income that balance might realistically provide -- and what you can do if you're worried it won't be enough.

What a $258,800 balance can do for your retirement finances

By itself, $258,800 is a lot of money. Over the course of a 20-year retirement or longer, it may not be.

If you apply the popular 4% rule to a balance that size, it works out to an initial annual withdrawal of $10,350. That's a mere $860 per month, give or take.

If we add in the average Social Security benefit today of $2,084, that raises your monthly income to around $2,950 and increases your annual income to about $35,400. But that's not a huge sum to live on. For some retirees, it may not even come close to covering housing, healthcare, food, transportation, and other basic living expenses.

How to build a larger retirement nest egg

If you find the average 401(k) balance among Americans ages 65 to 69 unsettlingly low, it may motivate you to approach your own savings differently. And one of the biggest advantages you can give yourself is simply starting early. The more years your investments have to grow, the less you'll need to save out of your own paycheck to reach your goals.

It's also smart to take full advantage of any 401(k) match your employer offers. A company match is essentially free money, and failing to claim it means leaving cash on the table.

You should also pay attention to how your money is invested. Many workers become overly conservative long before retirement, keeping too much of their portfolios in cash or lower-return investments like bonds.

While reducing risk becomes increasingly important as retirement gets closer, maintaining appropriate exposure to stocks could help your savings continue growing ahead of it. Just pay close attention to investment fees in your 401(k) and, if appropriate, consider loading up on a low-cost S&P 500 index fund instead of an actively managed fund with a huge expense ratio.

Increasing your 401(k) contribution rate whenever you receive a raise could also make a difference in your total balance. And if you allocate that raise to your 401(k) each year before it hits your paychecks, you shouldn't even notice it's missing.

What to do if retirement is right around the corner

If you're nearing retirement and your 401(k) balance is close to the average above, don't assume you're out of options. One strategy worth considering is delaying Social Security if possible. Your monthly benefit grows 8% for every year you delay your claim beyond full retirement age until age 70.

Working part-time is something else to consider if your 401(k) balance isn't where you'd like it to be. Even modest earnings could help stretch your savings.

Finally, take a close look at your spending. If you don't have a lot of room in your budget for extras, prioritize essentials and then try to find free or low-cost ways to stay busy.

A 401(k) balance of $258,800 isn't insignificant. But for many retirees, it may fall short even when combined with Social Security. If you're years away from retirement, prioritizing savings could leave you with a lot more money by the time you turn 65. And if retirement is close, maximizing Social Security, continuing to work, and keeping your spending under control could make your senior years more comfortable if your savings are limited.

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