Investing & Retirement · August 11, 2026 · 8 min read

"How does your 401(k) stack up?" is the wrong question

Key takeaways

A 401(k) balance on its own can't tell you whether you can retire. It's one input among many, and the chart doesn't know what you spend, when you plan to stop, what your spouse has saved, or what your money owes in tax.
Spending is the variable doing the most work, and it never appears on any chart. Two households with $1.5M are in completely different positions if one lives on $70,000 a year and the other lives on $160,000.
No balance chart accounts for Social Security, and for a lot of households approaching retirement it's the largest item on the list. The maximum benefit at 70 in 2026 is $5,181 a month.
$1M in a traditional IRA and $1M in a Roth are not the same amount of money. At a 22% effective rate, the traditional balance is closer to $780,000 of actual spending.
Vanguard reports the median 401(k) balance for ages 55-64 at $107,269 and the average at $305,006. Both describe the same people. The average is higher because a handful of very large balances pull it up.
Fidelity, running the same kind of report off its own plans, puts the average at $260,800 for ages 55-59 and $257,400 for ages 60-64. That's about $45,000 below Vanguard's average for the same years, because each company only sees its own customers.

I saw three different versions of the same general article last week: "Here's the average 401(k) balance by age. How do you stack up?"

That's a tough title to not feel intrigued by. It's a natural thing to want to compare yourself to others, and to know where you stand against the average person. These articles give you that quick hit, but there's so much more that goes into retirement planning than a single number.

I want to walk through everything that number doesn't tell you about your own retirement, then why the number itself is shakier than it looks, and finally what I'd look at instead. And I don't want to undermine anyone's feelings; wondering how you compare is common, and I still look at the articles too.

Everything the chart doesn't know about you

Even if your account balance is larger than what those articles report, there are so many variables missing from that number that I'd argue make it a lackluster metric by itself.

Does your spouse have a retirement account? Do you have a pension, and if you do, does it keep paying your spouse after you pass? What about a taxable brokerage account that's separate from your 401(k)? And what about all that equity in your home you haven't yet tapped into? Not to mention what any business you own may be worth. These are just a few of the variables that go into retirement planning beyond a single account balance. The whole idea is that people prioritize where they save their money differently, so comparing a single retirement vehicle instead of all the different places people put their money in real life isn't very useful.

That balance being reported also doesn't know what it's going to be used for, or how long. A $300,000 balance means different things to someone who is at the top of that age bracket at 64 than to someone at the beginning of the bracket at 55. It doesn't know whether you'll still be paying a mortgage, or if it'll be used to pay for health insurance in the years between your last paycheck and Medicare. What good is comparing the balance if there's no way to compare what it'll be used for? If you're spending half as much in retirement as someone with double the 401(k) balance, the end result is a wash even though the balances are so different.

So whether the comparison result lets you walk a bit taller that day, or leaves you feeling a bit deflated, just remember that it's a very small variable in the much bigger equation of planning for retirement.

Social Security never shows up in these charts

For many households, a huge chunk (that's the technical term) of retirement income will come from Social Security, which the reports don't account for at all.

The average retired worker benefit in January 2026 is $2,071 a month after the 2.8% cost-of-living adjustment. Someone who paid in the maximum for 35 years and waits until 70 gets $5,181 a month, which is $62,172 a year. A married couple who both earned well can end up with six figures a year coming in.

So if in retirement your Social Security covers all of your fixed expenses, and then some, how much does your 401(k) balance compared to someone else's really matter?

Two people with the same balance can have very different money

Here's another wrench to throw into the comparison.

Say two people are both 62 with $1M. One has all of it in a traditional 401(k). The other has all of it in a Roth.

Every dollar the first person takes out is ordinary income. As they pull out more in a single year, their tax rate is increasing, first through the 10% bracket, then 12%, and maybe even into the 22% bracket. Those withdrawals can also push up their income to a point that causes an increase in Medicare premiums two years down the road. On top of that, the income can increase how much of their Social Security gets taxed.

The second person's dollars come out with no tax at all, they don't count toward that Medicare number, or increase the taxability of Social Security.

On that report, these two hypothetical people both have $1M. But in practice, they have a very different retirement. I wrote about the window where you can shift money from the first column to the second here.

The number itself isn't solid either

Say you've decided to ignore all the nuance that I've laid out, and you just want to see how you compare. Unfortunately, the number you're comparing to depends on who you're asking.

Vanguard publishes a report every year called How America Saves, built from millions of 401(k) accounts in plans it runs for employers. In the 2026 edition, for people aged 55 to 64, the average balance is $305,006 and the median is $107,269.

Fidelity runs the same kind of report off its own accounts. As of March 2026, across 26,800 plans and 25.6 million participants, it puts the average at $260,800 for ages 55 to 59 and $257,400 for ages 60 to 64. The two averages are about $45,000 apart for people of the same age range.

As I talked about earlier, the issue is they're only seeing one part of the picture. If you have a 401(k) being held at one company, a rollover IRA at a different one, an old plan from a job you left 10 years ago you haven't rolled over yet, and a spouse with their own 401(k), each company only sees what they're holding. The number describes part of one household's savings, but the report headlines make it feel like that's the sum of all retirement savings.

Why the average is so much higher than the middle

Even inside the Vanguard report there are two numbers, $107,269 and $305,006, describing the same group of people. I'm going to walk through some examples quickly, because if you're going to compare those numbers to yourself, it's worth doing it right.

Let's put nine people in a room. Their 401(k) balances are $8,000, $30,000, $60,000, $85,000, $107,269, $180,000, $350,000, $750,000, and $1,174,785.

Line them by their 401(k) balance size and find the person standing in the middle. Four people to her left, four to her right, and she has $107,269. That's the median.

Now let's pool all the money together, and divide it among the nine people. Each person now has $305,006, or the average.

It's an interesting comparison. In my example (again, completely made up numbers), four people had balances below the median, but six of the nine were below the average. So just be careful when comparing yourself to the "average", which is susceptible to inflation by outliers.

What I'd look at instead

So what should you be looking at instead?

The place to start is deciding on what the money is for.

What do you currently spend in a year, and when you stop working how will that change? How many years is the money needed for, and do you want money left over after you're gone to give away?

What income will you receive independently from your 401(k), like Social Security, a pension, rental income, etc.? How much of your balance will need to be set aside for taxes?

If you answer those questions, you can start to build a plan that's tailored to you, and it matters less and less what other people have saved. A good first step is to understand your current spending so you can plan your savings goal around that number.

The next time one of those headlines shows up, I'd let it scroll past. The curiosity to check is normal, but there's not a whole lot to gain from finding out where you compare on that chart. Land above the average and you feel fine for an afternoon, but land below it and you feel like crap for a week (I say that with past experience).

Sources

Vanguard, How America Saves 2026, 25th edition. Figure 53, "Account balances by participant demographics, 2025," page 52. Participant data through December 31, 2025.
Fidelity, "Average retirement savings by age." 401(k) data from 26,800 corporate defined contribution plans and 25.6 million participants as of March 31, 2026.
Social Security Administration, 2026 Cost-of-Living Adjustment fact sheet, October 2025. Link
Social Security Administration, "What is the maximum Social Security retirement benefit payable?", 2026 figures. Link

This post is general information, not personalized advice. Talk to a fee-only fiduciary about your specific situation.