Comparing 401(k) balances among individuals with similar income levels: Where do you stand?

Comparing 401(k) balances among individuals with similar income levels: Where do you stand?

In a recent study, Vanguard's "How America Saves 2025" report has shed light on the relationship between income and 401(k) balances. The report provides average and median 401(k) balances for different income groups, offering valuable insights for individuals planning their retirement savings.

According to the report, people earning less than $40,000 per year typically have low median balances, reflecting lower savings rates. As income increases, so do the median and average 401(k) balances. For instance, those in the $150,000 and up income bracket have the largest balances, with both median and average 401(k) savings being the greatest among income groups.

However, it's important to note that median balances are consistently much lower than averages, highlighting wide variation within income groups and the impact of high balances on averages. For example, people earning $150,000 or more might have median balances around $221,220 or higher, though such balances provide limited retirement income relative to their earnings.

The report also emphasises the strong correlation between income and 401(k) savings amounts. For instance, for people earning between $100,000 and $149,999, the average 401(k) balance is $188,329 and the median balance is $98,434. On the other hand, for people earning between $30,000 and $49,999, the average 401(k) balance is $27,278 and the median balance is $10,928.

A rule of thumb suggests you'll need 10 times your final salary when you retire. Therefore, focusing on investing to achieve your personalised retirement goal will likely result in a 401(k) balance greater than the average for others in your income range. However, it's essential to remember that having a comfortable future requires having the money needed for it, regardless of what others in your income range have in their 401(k)s.

The report serves as a reminder that saving for retirement is crucial, and the earlier you start, the better. It's also important to review and adjust your savings strategy regularly to ensure you're on track to meet your retirement goals.

For those who wish to access the precise average and median balances by income bracket as reported in the 2025 Vanguard report, it's recommended to consult the full detailed tables from the official "How America Saves" report. The public summaries highlight the gap between median and average balances and the strong correlation between income and 401(k) savings amounts, providing a useful starting point for individuals planning their retirement savings.

Personal finance and retirement savings are closely linked, with income playing a significant role in determining 401(k) balances. For instance, individuals earning between $100,000 and $149,999 have an average 401(k) balance of $188,329, while those in the $30,000 to $49,999 income bracket have an average balance of $27,278. To maintain a comfortable retirement, it's crucial to focus on investing and saving money, aiming for a 401(k) balance greater than the average for your income range. Regardless of what others in your income group have, having the necessary funds for your personal retirement goal is essential.

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