Mar 23, 2026
American households are sitting on sizable amounts of retirement assets. But just like income and wealth, these assets are unequally distributed across the nation.
It shouldn’t come as a surprise that those with higher incomes also tend to have higher levels of retirement savings. But Vanguard’s How America Saves 2026 report offers some granular data on just how wide this gap truly is (1).
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Here’s the headline number: The average 401(k) balance at the end of 2025 was $167,970. That’s nowhere near the $1.28 million nest egg most workers believe they need for a comfortable retirement, according to Schroders (2).
However, that headline number is only part of the story. Digging deeper into Vanguard’s previous reports reveals just how skewed the average numbers are and how some workers may be falling further behind on their financial journeys.
The stark divide
The average 401(k) balance is heavily skewed by the top accounts.
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.
For ordinary workers and savers, the median balance is much more representative.
According to Vanguard’s 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’s still nowhere close to retirement-ready for most people.
Whether you’re 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.
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Comparing by income
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.
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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 payments may have ballooned beyond your income, so even if you’re earning six-figures your retirement balance is falling behind the average your peers have saved.
Vanguard’s How America Saves 2025 report offers some data to help you compare yourself to those in the same bracket as you (4).
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.
On the other end of the spectrum, high-income individuals 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.
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.
Simply put, if you’re middle class and have managed to save more than six-figures in your 401(k), you’re doing better than the majority in your income group — you are further along on the path to financial freedom than most of your peers.
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If you’re lagging behind, there are several ways to catch up.
How to close the gap
If you’re lagging behind those in your income group, the problem probably isn’t income but spending or debt.
Less retirement savings than someone with a similar paycheck is perhaps a good indication that you’re living above your means.
Lifestyle inflation, 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.
To close the gap, focus on paying down your debt and tightening up your monthly budget. 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.
Boosting your income could help, but there’s 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’re looking to make any financial progress.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Vanguard (1, 4); Schroders (2); Yahoo!Finance (3)
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
