Picture a 62-year-old warehouse supervisor in Ohio who, after 30 years of work, has $14,000 in a retirement account she opened just five years ago when her employer finally added a 401(k). Now picture a 35-year-old software engineer in Seattle whose balance just crossed $200,000. Both are real composites of the people behind the data, and both live in a country where the “average” 401(k) balance supposedly signals everything is fine.
Fidelity’s Q1 2025 retirement analysis reported that the average balance across its 24 million 401(k) accounts had climbed to a record $146,400, driven by strong market returns and steady contribution rates. That figure arrived after substantial stock market gains in 2023 and 2024, though notable market volatility in early 2025 partially offset those advances, making the Q1 snapshot a more tempered milestone than it might first appear. Either way, the number describes a reality that roughly half the country cannot relate to.
According to the Federal Reserve’s 2022 Survey of Consumer Finances (SCF), released in October 2023, only 54.3% of U.S. families held any retirement account at all, whether a 401(k), IRA, or similar vehicle. That means nearly half the country has zero dollars in a dedicated retirement savings plan. When those families are included in the calculation, the national median drops dramatically. A Congressional Research Service analysis of the same Federal Reserve microdata estimated that the median retirement balance across all U.S. families, including those with no account, falls approximately in the range of $35,000 to $45,000. That figure is an approximation rather than a precise finding, because it folds in the large share of families whose balance is zero, pulling the midpoint well below what active savers hold.
The SCF captured balances as of 2022, and market appreciation since then has likely lifted values for existing savers. But rising stock prices do nothing for families who never had an account to begin with. As of mid-2026, the structural gap between those inside the retirement system and those outside it remains the defining feature of American retirement preparedness.
Why the average is misleading
Even among families that do hold retirement accounts, the distribution is sharply lopsided. The Federal Reserve’s survey found a conditional median of $86,900 in 2022, meaning half of all account holders had less than that amount saved. The conditional mean, by contrast, was $334,000. That gulf exists because a relatively small share of very large accounts, often belonging to high earners who have contributed for decades, drag the average far above what a typical saver actually holds.
Quarterly snapshots from plan administrators like Fidelity and Vanguard amplify the distortion further. Their data only captures workers who are actively enrolled in a plan, filtering out employees at companies that offer no 401(k), part-time and gig workers without access, and anyone who cashed out a previous account after changing jobs. When those reports generate headlines about “record balances,” they are describing the experience of people already in the system, not the broader American workforce.
Age changes everything
A single national median also flattens enormous differences across the life cycle. Consider two workers: a 28-year-old with $15,000 in a 401(k) and a 62-year-old with the same balance. The younger worker may be saving at a perfectly healthy rate relative to income and career stage. The older worker is facing a retirement crisis.
The Federal Reserve’s SCF data allows breakdowns by age. Among families headed by someone aged 55 to 64 who held retirement accounts, the conditional median balance was roughly $185,000 in 2022. That sounds more reassuring than the all-ages figure, but most financial planners recommend having eight to ten times your annual salary saved by that stage. For a household earning the national median income of around $75,000, the benchmark would be $600,000 to $750,000, more than three times what the typical near-retiree account holder has accumulated.
Social Security offsets part of that shortfall. For many lower-wealth retirees, it provides the majority of their income. But Social Security was designed to replace only about 40% of pre-retirement earnings for an average earner, according to the Social Security Administration, not to serve as a sole income source. The gap between what people have saved and what they will need remains wide.
Who gets left out entirely
The deeper structural issue is access. Retirement account ownership tracks closely with income, education, and race. According to the Federal Reserve’s survey, families in the top income quartile were far more likely to hold retirement accounts and to carry balances large enough to meaningfully fund their later years. Families in the bottom half of the income distribution were more likely to lack employer-sponsored plan access altogether, to work jobs with no match or auto-enrollment, or to tap savings early during financial emergencies.
Racial disparities compound the problem. White families held retirement accounts at significantly higher rates than Black and Hispanic families in the 2022 survey, and their median balances were substantially larger. These gaps reflect decades of unequal access to employer benefits, homeownership, and intergenerational wealth transfers. They are systemic, not simply a matter of individual savings behavior.
Policy shifts aimed at narrowing the gap
Congress has moved to address some of these barriers. The SECURE 2.0 Act, signed into law in December 2022, requires new 401(k) and 403(b) plans established after that date to automatically enroll eligible employees, a provision that took effect in 2025. Auto-enrollment has consistently been shown to boost participation rates, particularly among lower-income workers who might not opt in on their own.
The law also expanded catch-up contribution limits for workers aged 60 to 63 and created provisions for emergency savings accounts linked to retirement plans, aiming to reduce the early withdrawals that erode balances over time. Whether these changes will meaningfully close the gap between those with retirement savings and those without is still an open question. The next wave of the Survey of Consumer Finances, expected to cover 2025 data, should offer the first comprehensive look at whether participation and balances have shifted since these provisions kicked in.
What workers can do right now
For anyone with access to a workplace retirement plan, the single highest-return move is contributing enough to capture a full employer match. That is effectively free money, and it compounds over decades. Beyond the match, financial planners widely recommend saving 10% to 15% of gross income for retirement, a target that major plan providers echo in their own guidance.
For workers without employer plan access, IRAs remain an option, though contribution limits are lower: $7,000 per year for those under 50 and $8,000 for those 50 and older, as of 2025. State-run auto-IRA programs, now enacted in roughly 17 states according to the Georgetown Center for Retirement Initiatives, are beginning to reach employees at small businesses that have never offered retirement benefits. These programs automatically enroll workers into a state-facilitated IRA unless they opt out, borrowing the same behavioral nudge that makes 401(k) auto-enrollment effective.
A record that leaves most Americans behind
Record 401(k) averages reflect real progress for millions of disciplined savers, and that is worth acknowledging. But those averages describe a self-selected group that is already inside the system. Nearly half of American families still have no retirement account at all. Until that changes, headline figures will keep overstating how prepared the country actually is for what comes after the last paycheck.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
