What Millennials Have Saved in Defined Contribution Accounts<\/p>\n
\u00a0
\n\u00a0Average
\n\u00a0Median<\/p>\n
\u00a025-34
\n\u00a0$42,640
\n\u00a0$16,255<\/p>\n
\u00a035-44
\n\u00a0$103,552
\n\u00a0$39,958<\/p>\n
Source: Vanguard’s How America Saves 2025 report<\/p>\n
How Much the Median Millennial Could Have Saved by 2055 <\/p>\n
We\u2019re going to do two calculations based on the two age groups above (25\u201334 and 35\u201344) for the median millennial.\n<\/p>\n
We\u2019ll choose an age roughly in the middle of each of these groups: 30 (roughly the middle of the 25\u201334 age group) and 40 (roughly the middle of the 35\u201344 age group).\n<\/p>\n
This is how much the median 30-year-old millennial today could have saved by age 65, considering the following figures:\n<\/p>\n
Starting balance (the median defined contribution plan account balance of a 25 to 34 year-old): $16,255Annual median salary: $57,356Annual employee contribution: 8.7%Annual employer contribution: 4.6%Annual total contribution: 13.3% of salary ($7,628)Assumed average annual return on investments: 7%Investment period: 35 years (until age 65)<\/p>\n
Based on the future value formula<\/a>, here\u2019s how much a 30-year-old\u2019s existing $16,255 could be worth by age 65, if they didn\u2019t add any more contributions to their account:\n<\/p>\n Future value formula: FV = PV \u00d7 (1+r)n\n<\/p>\n FV = 16,255 \u00d7 (1+0.07)35\u00a0 = about $173,548\n<\/p>\n Now, we can use the future value of an annuity formula<\/a>, which accounts for ongoing yearly contributions:\n<\/p>\n Future value of an annuity formula: FV = P \u00d7 (1+r)n \u2212 1\u200b \/ r\n<\/p>\n FV= $7628 \u00d7 (1+0.07)^35 \u2212 1 \/ 0.07 \u200b= about $1,054,471\n<\/p>\n So, if you add $173,548 plus $1,054,471, the median 30-year-old millennial could have about $1.23 million saved up by the time they reach age 65\u2014so they\u2019ll be a millionaire in 2055.\n<\/p>\n Doing the same calculation with an annual median salary of $64,844, a savings rate of 13.3%, and 25 years until retirement, we find that the median 40-year-old millennial could have about $762,329 saved up by the time they reach age 65\u2014so they they won\u2019t be a millionaire in 2055.\n<\/p>\n What Millennials Should Do Now To Ensure Millionaire Status in Retirement While contributing 13.3% of your income (including an employer match<\/a>) is a strong start, gradual increases over time may help ensure millionaire status later on.\n<\/p>\n As a rule of thumb, consider raising your contributions by 1% to 2% annually, or whenever you receive a raise.\n<\/p>\n Small, consistent increases can compound substantially over time, especially when invested in diversified<\/a>, low-cost index funds<\/a> that track broad market performance.\n<\/p>\n Avoid Early Withdrawals and High-Interest Debt <\/p>\n Early withdrawals<\/a> from 401(k)s or IRAs not only reduce compounding growth but also trigger taxes and penalties.\n<\/p>\n Withdrawals from retirement accounts before age 59 \u00bd may be subject to a 10% early distribution tax, with certain exceptions, such as death, disability, or the birth or adoption of a child.\n<\/p>\n If you treat your retirement accounts as untouchable, you\u2019ll be more likely to stay on track to fit a seven-figure retirement account balance.<\/p>\n Tip<\/p>\n Managing or eliminating high-interest debt\u2014such as credit cards or personal loans\u2014ensures that more of each dollar can go toward investments rather than interest payments.<\/p>\n Diversify Beyond the Workplace Plan <\/p>\n Relying solely on a workplace 401(k)<\/a> may limit flexibility. Opening an IRA, Roth IRA<\/a>, or taxable brokerage account in addition can expand investment options and provide access to funds before retirement age if needed.\n<\/p>\n Roth IRAs, for example, allow tax-free withdrawals once you reach age 59 \u00bd, and contributions (but not earnings) can be withdrawn penalty-free earlier if necessary. Millennials who diversify across account types may be able to gain more control over their future tax liability and withdrawal strategy.\n<\/p>\n The Bottom Line <\/p>\n When looking at retirement, the median 30-year-old will be better off than the median 40-year-old\u2014by a lot. Why is this, considering the median 30-year-old has less saved than the median 40-year-old, according to data from Vanguard?\n<\/p>\n
\n Increase Contributions Steadily <\/p>\n