American households are sitting on sizable amounts of retirement assets. But just like income and wealth, these assets are unequally distributed across the nation.<\/p>\n
It shouldn\u2019t come as a surprise that those with higher incomes also tend to have higher levels of retirement savings. But Vanguard\u2019s How America Saves 2026 report offers some granular data on just how wide this gap truly is (1).<\/p>\n
Here\u2019s the headline number: The average 401(k) balance at the end of 2025 was $167,970. That\u2019s nowhere near the $1.28 million nest egg most workers believe they need for a comfortable retirement, according to Schroders (2).<\/p>\n
However, that headline number is only part of the story. Digging deeper into Vanguard\u2019s previous reports reveals just how skewed the average numbers are and how some workers may be falling further behind on their financial journeys.<\/p>\n
The average 401(k)<\/a> balance is heavily skewed by the top accounts.<\/p>\n There are roughly 654,000 individuals with $1 million and more in their 401(k) plans, according to Fidelity data cited by Morningstar (3). This seven-figure club inflates the average retirement figure.<\/p>\n For ordinary workers and savers, the median balance is much more representative.<\/p>\n According to Vanguard\u2019s latest report, that figure stands at just $44,115 at the end of 2025. Although the median balance is up 16% from the previous year, it\u2019s still nowhere close to retirement-ready for most people.<\/p>\n Whether you\u2019re doing better or worse than the median worker largely depends on your income. This is why comparing your retirement savings to those in your income group is so important.<\/p>\n Read More: 5 essential money moves to make once you\u2019ve saved $50,000<\/a><\/p>\n Read More: Young millionaires are ditching stocks. Why older Americans should take note<\/a><\/p>\n Theoretically, your income should be closely linked to your ability to save. On paper, at least, more income means you have more excess cash at the end of paying all your essential bills every month to invest in your future retirement.<\/p>\n In reality, your retirement assets could greatly deviate from those in your income group. You might be more disciplined at saving or better at picking out-performing investments, which puts you ahead despite a modest income. On the other hand, your lifestyle costs and debt<\/a> payments may have ballooned beyond your income, so even if you\u2019re earning six-figures your retirement balance is falling behind the average your peers have saved.<\/p>\n Story Continues <\/p>\n Vanguard\u2019s How America Saves 2025 report offers some data to help you compare yourself to those in the same bracket as you (4).<\/p>\n According to the report, low-income workers earning between $15,000 and $29,999 had just $19,858 on average in their 401(k) plans. The median worker in this cohort had a balance of just $6,475.<\/p>\n On the other end of the spectrum, high-income individuals<\/a> had significantly more saved up. For those earning more than $150,000 a year, the average balance was $377,488 while the median balance was $221,220.<\/p>\n For the vast majority of Americans who are in the middle class (earning between $30,000 to $150,000), the median balances paint a clear picture. The lowest balance is $10,928 and the highest is $98,434.<\/p>\n Simply put, if you\u2019re middle class and have managed to save more than six-figures in your 401(k), you\u2019re doing better than the majority in your income group \u2014 you are further along on the path to financial freedom than most of your peers.<\/p>\n If you\u2019re lagging behind, there are several ways to catch up.<\/p>\n If you\u2019re lagging behind those in your income group, the problem probably isn\u2019t income but spending or debt.<\/p>\n Less retirement<\/a> savings than someone with a similar paycheck is perhaps a good indication that you\u2019re living above your means.<\/p>\n Lifestyle inflation<\/a>, expensive monthly interest payments or excessive spending habits could be soaking up all the excess cash that you could have put into your 401(k) instead.<\/p>\n To close the gap, focus on paying down your debt and tightening up your monthly budget<\/a>. Working with a debt consolidation firm to lower your monthly interest payments or a financial advisor to craft a better spending plan could be the key to your financial freedom.<\/p>\n Boosting your income could help, but there\u2019s a chance you carry your bad spending habits into the next income bracket and lag behind your new peers as well. Solving this underlying issue is crucial if you\u2019re looking to make any financial progress.<\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n Vanguard (1<\/a>, 4<\/a>); Schroders (2<\/a>); Yahoo!Finance (3<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"American households are sitting on sizable amounts of retirement assets. 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