401(k) retirement balances show growth amid market risks

A study by financial services firm Empower, analyzing over five million account holders, shows that average 401(k) balances are rising. The average balance increased 11.2 percent year-on-year, an increase of approximately $36,000. Data indicates that participants often reach the million-dollar milestone in their 50s, with average balances for that age group reaching $1,073,368. Balances typically peak in the 60s before declining in the 70s and 80s due to withdrawals.

Financial experts highlight several risks to retirement security. Market volatility poses a significant threat to those nearing retirement, as downturns can delay retirement plans or necessitate tighter budgets. Diversification is recommended to mitigate these losses. Additionally, retirees face timing risks and the need to account for rising life expectancy and inflation, which may require maintaining some higher-growth investments to ensure funds last throughout a longer retirement.