Join AAA
Join AAA
linkedin image
Money | Saving Money
How much money should you have in your 401k?

Money milestones and tips to get your savings on track

One of the most common investment vehicles in the U.S. is a 401(k) plan, an employer-sponsored plan to help employees save for retirement. According to the U.S. Department of Labor, there are 560,241 401(k)-type plans in the U.S. with nearly 80 million active participants.


If your employer offers a 401(k) plan and you’re participating, you might be wondering how much you should be putting aside for your golden years. A rule of thumb is that you should add one year of your salary to your savings every five years. Using this guideline, along with a few benchmarks for your savings, can help ensure you’re on track to a secure retirement. So, here are some savings milestones you may want to aim for as you reach each decade of your life.

AAA can help you get started to manage, borrow, and save money. Learn More

When you reach age 30, you’ll want to aim to have at least one year’s salary in your 401(k). So, if you’re making $60,000 per year, you’ll want to have $60,000 in your 401(k) account.


As you age, hopefully, you’ll receive raises and promotions to increase your salary. Therefore, when you reach age 40, you’ll want to aim to have at least three years of your salary saved for retirement. If you now make $70,000 per year, you’ll want to have roughly $210,000 set aside in your 401(k).

Older Couple

Age 50 is a great check-in point to review your savings and ensure you’re on track for your retirement savings goals. It’s recommended to have at least five years’ worth of your salary in savings. If you now make $90,000, you should aim to have $450,000 in your 401(k) account.


Ideally, you would want to start saving as soon as possible. But, that’s not always the case for everyone. Even if you haven’t made saving for retirement a priority, it’s never too late to start. Starting now is better than not starting at all. So, if you need a little help building up your 401(k) account, here are a few suggestions to increase your savings.

  • Start budgeting. Try taking a look at your spending habits to see if you can cut back on some expenses. By cutting back on your expenses, you can free up some cash to contribute more to your 401(k) account.
  • Increase your income. This may seem easier said than done, but there are several ways you can increase your cash flow. For starters, if it’s time for a raise, you may want to ask your employer about increasing your salary. Or, you could consider starting a side hustle to make a little extra cash during your free time.
  • Reevaluate your retirement lifestyle. Determine if you’ll be able to continue spending the same amount of money you are now once you’ve retired. If not, it might be time to cut back on unnecessary expenses so you can live a more comfortable life during your retirement.
  • Pay down debt. High-interest debt can eat away at your extra cash. Therefore, making a plan to pay it off will help you start putting more of your money into your 401(k) and less toward high-interest debt. 
  • Capitalize on compound interest. Compound interest can work magic on your 401(k) accounts. Essentially, it’s interest on interest that can cause your wealth to snowball. Taking advantage of this compound interest early on in your life will help you accumulate a more substantial nest egg for the future.

Many employees look forward to their years of retirement. Working hard now to ensure you have plenty of savings to live off of in your golden years will make your retirement more comfortable. So, even if you’re a little behind, there is still time. Start now and begin making a plan to save for your future.