The Average American Age 65 and Older Has $232,710 Invested in a 401(k). 3 Strategies to Help You Beat the Average Before You Retire

Many seniors inevitably kick off retirement with no personal savings whatsoever. That's not a great thing.

But recent data finds that the typical retiree aged 65 and over has a nest egg worth $232,710. That's a decent sum of money for sure. But when we dig deeper, we can see that it's actually not a whole lot.

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The money in your retirement plan may need to last for decades, so it's important to manage withdrawals wisely. If you apply the 4% rule to a savings balance of $232,710, that only gives you about $9,300 of annual income. And while that may be on top of Social Security, you're not exactly rolling in money.

The good news, though, is that with the right strategies, you can build yourself a retirement nest egg that well exceeds the average $232,710 among those 65 and older. Here are three tactics that could, in fact, leave you with $1 million or more to your name.

1. Start early

When it comes to building wealth for retirement, time is really your greatest asset. The reason boils down to compounded returns.

As you earn money in your retirement plan, you get the opportunity to reinvest your gains so that you're building on them year after year. The more years you have to do that, the higher a balance you're likely to end up with.

Let's say you start saving $350 a month in a retirement plan at age 25, with the intent to retire at 65. If your portfolio delivers an average annual 8% return (more on that in just a minute), that means you could be sitting on almost $1.1 million by the time you're ready to end your career.

But if you shrink your savings window by just five years and only save that $350 a month over a 35-year time frame, you're looking at a balance of about $724,000. That's respectable, for sure -- but not a balance that's on the cusp of $1.1 million.

2. Load up on stocks in your retirement portfolio

If you want to beat the average savings balance among Americans 65 and up, then you'll need to make sure your money is able to grow nicely while you're saving it. To that end, it pays to put your retirement savings into the stock market, whether by building a portfolio of individual shares or putting money into S&P 500 index funds.

The 8% return used in the example above is a notch below the stock market's average. If you play it safe in your portfolio so that you're only getting a 5% return on your money, then saving $350 a month over 40 years will leave you with about $507,000, instead of more than double that.

3. Don't retire too soon

Many people aim to retire at 65. It's when Medicare coverage kicks in, and it's an age when you may feel like you're done with the daily grind.

But life expectancies have increased over the years, which means that if you choose to retire in your late 60s or early 70s, you might still have a number of good years ahead of you. Only you'll also have an opportunity to keep adding to your savings and growing that money further by working a bit longer.

Let's say you're able to save $350 a month over a 45-year period, instead of 40 years. Assuming the same 8% return from above, that could mean amassing a nest egg worth over $1.6 million.

If you really feel done with work by age 65, another option you can consider is shifting to a lower-paying but less stressful job. Even if you're not able to add to your savings, working a few more years could mean holding off on dipping into your savings. That still gives you a higher balance to retire with once you're ready to stop working completely.

It's a good thing to see that the typical older American has a decent sum of money on hand for retirement. But you have the potential to do a lot better -- and set yourself up with way more wealth for your senior years.

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