Home / Business and Economy / American Retirement: Record Savings Mask Median Crisis
American Retirement: Record Savings Mask Median Crisis
18 Jun
Summary
- Median 401(k) balance of $44,115 struggles to fund retirement.
- Hardship withdrawals hit a record high of 6% in 2025.
- Plan design, not individual effort, drives retirement savings.
Vanguard's 25th annual retirement study highlights a significant disparity in American retirement savings as of year-end 2025. The average 401(k) balance reached a record high of $167,970, an increase driven by a strong stock market. However, the median balance, representing the middle saver, was only $44,115.
This median figure, when subjected to a standard 4% withdrawal rate, yields a meager $1,765 annually, insufficient for basic living expenses. Concurrently, hardship withdrawals from 401(k) plans saw a concerning rise, with 6% of Vanguard participants taking them in 2025, more than triple the pre-pandemic rate.
The study indicates that individual initiative alone is not the primary driver of retirement security. Instead, plan design features such as automatic enrollment, escalation, and professionally managed default funds are instrumental in encouraging consistent saving. Nearly half of 401(k) holders credit these plans as their sole reason for saving for retirement.
