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Mark Prather By Mark Prather • February 8, 2019

Can You Save $5 Million? Because that is what you will NEED!

The median 401(k) account balance is a paltry $24,800. It’s clear that despite an enormous bull run since the 2009 lows, not enough Americans are saving for retirement or don’t have pre-tax retirement plans like a 401(k). I’m sure it’s a combination of both.

What I’d like to do is compare the latest average 401(k) balance by age with my recommended average 401(k) balance by age for financial independence seekers. Let’s see how big the differences are so we can explain how important it is for everybody to focus on their finances.


My default assumption is that everybody should have at least $1,000,000 in their 401(k) or total pre-tax retirement accounts by the time they turn 60. The range is between $1,000,000 – $5,000,000.

A $1,000,000 gross 401(k) account ends up being roughly $800,000 after-tax. Multiply $800,000 by 3% – 5% and you get between a $24,000 – $40,000 a year safe withdrawal rate to spend until death.

Depending on where you live and how luxurious you want your retirement to be, $24,000 – $40,000 a year may not be enough. If you plan to retire in a high cost of living area like San Francisco, having 5X that amount for spending might be more appropriate.


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