May 29, 2026
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Every year, one of the largest asset managers in the country publishes a report on how ordinary Americans are saving for retirement. And Vanguard’s 2026 edition of the How America Saves report offers some encouraging good news: Retirement accounts are booming.
At the end of 2025, the average 401(k) balance across 5 million accounts was up roughly 13%, primarily because of the surging stock market, while the average balance sat at $167,970, which is not nearly enough for retirement but a healthy amount nonetheless.
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So, the takeaway is that most Americans are making steady progress toward saving for retirement, right? Not really. Digging deeper into the numbers reveals that most savers across the country are actually lagging much further behind than the headline suggests.
Here’s why nearly half of all American workers haven’t got enough retirement savings to afford a new car, let alone be ready for years of retirement.
Wealth inequality
Starting off, just looking at the average retirement balance can be misleading, because it’s easily skewed by the wealthiest savers and investors in the dataset.
For example, nearly 1 in 4 people (21.9%) fit into the category of being a 401(k) millionaire as of March 31, 2026, according to Empower’s data. On its own, this cohort of wealthy savers and investors can pull the average balance up substantially, masking the wide wealth disparity across America’s workforce.
To get a clearer view of the typical American’s nest egg, the median retirement balance is a better measure. Median is measured by arranging retirement balances in either ascending or descending order and finding the midpoint of that dataset. By splitting the dataset into two equal halves, it isn’t easily skewed by outliers.
Using this measure, the median 401(k) account balance at the end of 2025 was just $44,115. That’s less than the price of an average new car, which sold for $49,461 in April 2026, according to Kelley Blue Book data.
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The disturbing conclusion: Half of all workers and savers across the country can barely afford a new vehicle in cash, let alone a comfortable retirement. However, if your nest egg is in the bottom half of this dataset, the good news is that there are practical ways to catch up.
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What you can do to close the gap
Once you’ve realized your nest egg is lagging behind, there are several ways to meaningfully shift your savings trajectory.
If your employer offers automatic contribution enrollment, it’s probably a good idea to opt in immediately. Auto-contributions remove the willpower problem entirely, making saving a default rather than a decision you have to remake every paycheck. Pair that with auto-escalation and your savings rate grows quietly in the background without lifestyle disruption.
The next step is usually to get some exposure to the stock market. As Vanguard’s report makes clear, the S&P 500’s 16% gain in 2025 was a key factor in rising average balances.
If you don’t know where to start, platforms like Moby deliver expert stock and recommendations to help you identify strong, long-term investments backed by advice from former hedge fund analysts. In four years, and across almost 400 stock picks, their recommendations have beaten the S&P 500 by almost 12% on average. They also offer a 30-day money-back guarantee.
Moby’s team spends hundreds of hours sifting through financial news and data to provide you with stock reports delivered straight to you. Plus, their reports are easy to understand for beginners, so you can become a smarter investor in just five minutes.
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Finally, consider getting some professional help to get you on track.
With Vanguard, you can connect with a personal advisor who can help assess how you’re doing so far and make sure you’ve got the right portfolio to meet your goals on time.
Vanguard’s hybrid advisory system combines advice from professional advisors and automated portfolio management to make sure your investments are working to achieve your financial goals.
All you have to do is fill out a brief questionnaire about your financial goals, and Vanguard’s advisors will help you set a tailored plan, and stick to it.
Don’t let the wide wealth and savings gap discourage you. A few good moves and some professional assistance is all it takes to start building a bigger nest egg than your peers.
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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.
