The average 401(k) balance climbed to a record $167,970 at year-end 2025, according to Vanguard’s 25th edition of the How America Saves report, which tracked the behavior of nearly 5 million workers.
That figure belongs to a version of the American worker who, statistically speaking, barely exists in the broader workforce. The median balance, which represents the person at the exact midpoint of the distribution, was just $44,115, Vanguard reported.
That four-to-one gap means a small cohort of high-balance savers is inflating the figure most people use as their goalpost.
Vanguard’s median 401(k) balance translates to $147 a month in retirement
The median 401(k) balance stood at $44,115, according to Vanguard’s How America Saves 2026 report. Applied to a standard 4% annual withdrawal rate, that translates to roughly $147 a month in retirement.
Craig Copeland, director of wealth benefits research at Employee Benefit Research Institute (EBRI), says Americans’ retirement confidence has declined amid financial pressures.
Retirement confidence has clearly softened this year, and the data show why…. Americans are contending with a mix of immediate financial pressures and long-term uncertainty.
Northwestern Mutual’s 2026 Planning & Progress Study found that U.S. adults believe they need $1.46 million to retire comfortably.
Against that benchmark, the median 401(k) saver is roughly 33 times behind, a gap that no annual contribution increase alone can close. Retirement confidence is slipping alongside that widening savings gap.
Only 64% of Americans said they feel confident they have enough money to live comfortably throughout retirement, down from last year, EBRI found in its 2026 survey.
Worker confidence fell six percentage points to 61%, while retiree confidence dropped five percentage points to 73%.
Catch-up contributions favor high earners over workers who need them most
The Internal Revenue Service raised the annual 401(k) contribution ceiling to $24,500 for 2026, with an additional $8,000 catch-up allowance for workers aged 50 and older.
Workers between 60 and 63 qualify for an $11,250 “super catch-up” under the SECURE 2.0 Act, bringing their maximum possible annual contribution to $35,750.
The benefit of those provisions flows disproportionately to high earners, who already hold the largest balances, Vanguard’s data reveal.
Among participants earning $150,000 or more, 52% used catch-up contributions, while fewer than 1% of those earning under $30,000 did the same, the report found.
A worker earning $50,000 per year would need to set aside nearly half of every paycheck to max out the standard $24,500 limit.
Hardship withdrawals climb for a sixth straight year at Vanguard
Even as overall account balances hit record highs, more workers are pulling money from their 401(k)s for emergencies, a pattern that hits lower-balance savers hardest.
About 6% of Vanguard participants initiated a hardship withdrawal in 2025, up from 5% in 2024 and triple the pre-pandemic rate, the firm’s report found.
The 6% figure marks the sixth consecutive annual increase in Vanguard’s data. The rule change that helped drive the trend came in the Bipartisan Budget Act of 2018, which removed the requirement to first take out a 401(k) loan before requesting a hardship withdrawal, effective for plan years beginning after 2018.
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The median amount withdrawn was $1,900. Vanguard researchers noted that participants who took multiple distributions are essentially using their retirement plans as emergency savings.
Broader survey data reinforce the financial pressures squeezing working households. About 65% of workers described debt as a problem, and nearly one in three carries more than $25,000 in non-mortgage debt, EBRI’s 2026 survey found.
Teresa Ghilarducci, a professor of economics at The New School who helped develop the Trump administration’s proposed universal 401(k) program, told Fortune that lower-income workers remain skeptical of retirement accounts because they have long been shut out of them.
Vanguard’s own savings guidance exposes the gap in what workers can realistically contribute
Vanguard recommends saving 12% to 15% of annual pay, including the employer’s match, to remain on track for a secure retirement.
The average total savings rate, combining employee and employer contributions, reached a record 12.1% in 2025, the firm reported. That figure lands within the recommended range but masks wide variation driven by income and plan quality.
Employer matching contributions averaged a record 4.7% in 2025, meaning workers in plans with lower or no matches must shoulder a significantly greater share of the savings burden.
“While the progress and participant outcomes are significant, they also highlight where we need to go next,” said Lauren Valente, managing director of workplace solutions at Vanguard, in the firm’s press release.
For a household earning $60,000 and juggling rent, child care, student loans, and insurance, directing 12% of gross pay toward retirement requires setting aside $7,200 annually.
Nearly six in 10 workers told EBRI that the cost of health care alone is hurting their ability to save, illustrating how competing expenses erode retirement contributions.
The real 401(k) benchmark for most American workers
Plan participation has climbed to a record 86%, driven by automatic enrollment and auto-escalation features that have brought millions of additional workers into the system, Vanguard confirmed.
Those structural fixes have expanded access, but the widening gap between average and median balances suggests that adequacy, not participation, is where the retirement system now falls short for most workers.
Vanguard’s own 12% to 15% savings target is well above what a household earning $60,000 can typically absorb after debt, health care, and everyday expenses, leaving the median saver structurally behind the benchmarks Vanguard itself recommends.
