Understanding Your 401(k) at Retirement: What the Numbers Really Tell You

The Gap Between Average and Reality

When planning for retirement, many people focus on average 401(k) balances—but that metric can be misleading. According to data compiled by Empower as of October 2025, the average 401(k) balance across all age cohorts stood at $326,459. However, this figure masks significant variation across different life stages and doesn’t necessarily reflect what most people actually have saved.

The critical distinction lies between averages and medians. While an average sums all values and divides by the count, a median identifies the middle point in a dataset. This matters enormously: averages can be skewed by a small number of exceptionally large accounts, whereas medians more accurately represent typical savings levels. For retirees in their 70s, the median 401(k) balance is just $92,225—substantially below the $425,589 average for that age group.

How 401(k) Balances Break Down by Age

The progression of retirement savings across different decades reveals important patterns:

These figures demonstrate that while account values peak in the 50s age group, the median balances tell a different story. Many individuals approaching or in retirement are working with considerably modest 401(k) reserves.

Building a Sustainable Retirement Income Strategy

A 401(k) balance of approximately $92,000 for someone in their 70s presents a genuine challenge for long-term sustainability. When combined with Social Security benefits—averaging around $2,013 monthly or $24,156 annually as of recent data—the total income may prove insufficient without additional resources.

Rather than relying on a single source, successful retirees typically construct a diversified income portfolio:

• Dividend-yielding investments that generate consistent cash flow
• Interest-bearing savings vehicles providing stable returns
• Employer pensions or deferred compensation arrangements
• Annuity products offering guaranteed income floors
• Part-time work or consulting during early retirement years

The Path to Adequate Retirement Savings

The data underscores a fundamental reality: most Americans should aim to build retirement reserves significantly above the median. This requires honest assessment of several factors:

First, calculate your projected retirement expenses—housing, healthcare, daily living costs, and leisure activities. Then determine what combination of 401(k) distributions, Social Security, and other income sources will cover this total.

Second, recognize that 401(k) accounts represent just one piece of your retirement puzzle. Those accumulating wealth substantially beyond median levels typically leverage tax-advantaged accounts holistically, including IRAs, taxable brokerage accounts, and real estate holdings.

Third, the earlier you develop a comprehensive retirement plan, the more time compound growth works in your favor. Even modest additional contributions in your 40s and 50s can meaningfully shift your trajectory by your 70s.

The median figures serve as a cautionary benchmark—highlighting why deliberate, strategic retirement planning throughout your working years remains essential for achieving financial security in later life.