“How much should I have in my 401(k) by age 40?”
It is a reasonable question. Unfortunately, many of the answers are not especially useful. I got on this topic this evening when CEO Rose sent me an article from Investopedia asking how many Americans actually have $500,000 saved by age 40. This, in turn, reminded me of a table I had seen on a website called Financial Samurai.
Financial Samurai's table estimates how much someone should have accumulated in a 401(k) at different ages. At age 40, the targets range from $250,000 to $1 million, with $500,000 presented as the middle figure. By age 60, the range rises to between $1 million and $5 million.
Those numbers certainly attract attention. Whether they improve retirement planning is another matter.
The Problem Is Not the Arithmetic
The Financial Samurai projections are mathematically possible. Someone who begins working at 22, contributes the annual maximum nearly every year, receives substantial employer contributions and earns favorable investment returns could accumulate those amounts.
But that is not simply a story about discipline. It assumes:
- Continuous employment beginning at approximately age 22
- Access to a workplace retirement plan
- The ability to contribute the annual maximum
- No significant interruptions caused by unemployment, caregiving, illness or disability
- No loans or withdrawals
- Employer contributions that could equal as much as 100% of the employee’s contribution
- Investment returns ranging from 0% to 10%
That describes a narrow and financially fortunate group of workers. It should not be presented as a universal standard.
The problem is not the calculation. It is the label: “How much you should have.”
A Benchmark for the Exceptional Becomes a Judgment on Everyone Else
The Investopedia article and analysis that started me down this rabbit hole recently reported that only approximately 10.5% of Americans under age 40 have a total net worth of at least $500,000.
Net worth includes retirement accounts, taxable investments, home equity and other assets, less debt. Financial Samurai’s middle target expects a 40-year-old to have that same $500,000 in a 401(k) alone.
In other words, a level of total wealth reached by roughly one in ten younger Americans is presented as the middle retirement-plan target.
That is not a practical benchmark for the general population. It is an illustration of what an unusually successful maximum saver might accumulate.
Most Workers Cannot Simply Maximize Their Contributions
The 2026 employee contribution limit is $24,500. For a worker earning approximately $60,000, contributing the maximum would consume more than 40% of gross pay.
That is before taxes, housing, healthcare, childcare, student loans, transportation and every other household expense.
Telling workers to “max out” their 401(k) may sound encouraging, but it ignores the difference between the legal contribution limit and someone’s actual financial capacity.
The assumptions also overlook plan access. According to the Bureau of Labor Statistics, 70% of private-industry workers had access to a workplace defined contribution plan in March 2025, while only 50% participated. A substantial portion of the workforce therefore cannot follow Financial Samurai’s proposed path.
“Find Yourself a Good Employer”
Financial Samurai notes that employer contributions can substantially increase retirement savings and concludes: “Hence, find yourself a good employer!”
I find this advice particularly unhelpful.
Employees do not ordinarily select an employer based primarily on its 401(k) contribution. Salary, healthcare, job security, advancement opportunities, working conditions, location and family responsibilities all matter.
A larger employer contribution does not automatically make an employment offer better. An additional retirement contribution can be offset by lower wages, expensive healthcare, a lengthy vesting schedule or poor working conditions.
A more useful recommendation would be:
Contribute enough to receive the full employer contribution available to you. When considering a new position, evaluate the retirement plan as part of total compensation—not in isolation.
That gives employees something concrete to evaluate without pretending that everyone can simply shop for a more generous employer.
Are Age-Based Benchmarks Worthless?
Not entirely.
A benchmark can start a conversation. It can encourage someone to review their contribution rate, increase it when affordable or determine whether retirement expectations need to change.
But a benchmark becomes harmful when it is treated as a verdict.
Someone who has $150,000 at age 40 is not automatically failing. Someone with $500,000 is not automatically prepared. The first person may have modest retirement expenses, a pension and little debt. The second may expect an expensive lifestyle, plan to retire early and carry substantial obligations.
An account balance without context tells us surprisingly little.
Ask a Better Question
Instead of asking:
“How much should everyone have saved by age 40?”
Ask:
“Based on this person’s earnings, current savings, expected retirement age, projected expenses and Social Security, are they on a workable path?”
That question does not produce a universal number. It produces an individual answer.
It also leads to decisions that someone can actually make:
- Is the current contribution sufficient?
- Can it be increased gradually?
- Is the entire employer contribution being received?
- Are expected retirement expenses realistic?
- Would working longer materially improve the result?
- Does the investment approach match the time available?
- What other income will be available in retirement?
Those questions lead to planning. Comparing someone with a hypothetical worker who has maximized contributions without interruption since age 22 mostly produces anxiety.
The Parting Glass
Retirement is not a competition to reach an arbitrary balance by a particular birthday.
Financial Samurai’s table can illustrate what sustained maximum contributions might produce. It should not be used as a general measure of whether someone has behaved responsibly or is prepared to retire.
A useful retirement projection should inform the next decision. It should not merely tell someone how far behind they appear to be.
The appropriate question is not whether someone has reached the balance assigned to their age.
It is whether the path they are currently following can reasonably support the retirement they are trying to build.
Sources:Investopedia,Financial Samurai,Bureau of Labor Statistics, andVanguard,How America Saves 2026.