Surveys consistently show that American workers woefully undersave for retirement and are unlikely to have enough money to last throughout their golden years. The good news, particularly for younger workers, is that the rules for how to grow a 401(k) are fairly simple, once you know what they are.
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In fact, professional financial advisors can give you tips to help double your portfolio. Let's dig into those secrets. But first, here are some assumptions that will help the following numbers make sense. (If you prefer, you can recalculate with your own numbers here.)
Income: $50,000. The average college graduate of the class of 2022 can expect a starting salary of $47,000, according to Zippia. So, that seems like a fair salary expectation for a young professional.
Starting 401(k) balance: $60,000. This is approximately the average 401(k) balance for an income earner in the $50,000 to $74,999 range, according to Vanguard's How America Saves survey.
Average annual investment return: 7 percent. We used the Vanguard Target Retirement 2055 Fund (VFFVX) as a proxy. It is intended for investors with about 40 years left until retirement and is managed by one of the investment industry's most well-respected firms. The five-year average annual return for the fund was 7.54 percent. For the sake of simplicity, we rounded the number down. (Note: Past performance for any investment cannot predict future performance.)
Here are some tips for increasing your retirement savings by boosting your 401(k).
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