401(k) Reality Check: What Americans Are Actually Saving by Age

2026-01-21 03:02:09

Only about two-thirds of working-age Americans are actively participating in retirement plans, according to Federal Reserve data. The remaining third cite various obstacles: inflation squeezing household budgets, competing financial priorities like emergency funds and credit card payoff, and simply not having enough left over each month to save.

Among those who do contribute to a 401(k), the largest group—28% of savers—reports balances between $50,001 and $100,000. This finding comes from a GOBankingRates survey of 1,000 employed Americans ages 21 and older who have held their current position for at least one year.

What’s striking is how little age alone predicts retirement readiness. The numbers tell a concerning story across every demographic.

The Savings Gap Across Generations

Gen Z and younger millennials (ages 21-34) show the most diverse savings range: 65% have between $25,000 and $100,000 saved, while 20% have under $25,000, 11% have $100,001 to $500,000, and 5% don’t have a 401(k) at all. Despite their younger timeline, they’re also the most optimistic—22% expect to have over $1 million by retirement.

Older millennials (ages 35-43) are less engaged: 10% don’t have a 401(k) compared to younger cohorts. Those with one show more spread: 19% have under $25,000, 21% have $25,001 to $50,000, 28% have $50,001 to $100,000, 18% have $100,001 to $500,000, and 5% have over $500,001.

Gen X (ages 45-54) displays a surprisingly similar pattern to millennials despite having more accumulation years: 17% under $25,000, 22% between $25,001 and $50,000, 28% between $50,001 and $100,000, and 26% above $100,001.

Those ages 55-64 face a troubling reality on the retirement doorstep: 19% have under $25,000, 21% have $25,001 to $50,000, and 28% have $50,001 to $100,000—meaning 68% haven’t broken six figures.

Americans 65 and older present the starkest picture: 36% have $50,000 or less, 58% have $100,000 or less, and only 8% have over $500,001. Notably, 19% have no 401(k) at all, possibly relying on pensions or other retirement vehicles.

How Much Should You Actually Have?

The gap between reality and readiness becomes clear when examining expert benchmarks. Financial professionals suggest accumulating:

Age 30s: One year’s annual salary
Age 40s: Three times annual salary
Age 50s: Six times annual salary
Age 60s: Eight times annual salary

By retirement age, experts recommend having at least 10 times your pre-retirement income set aside. This allows you to live on roughly 80% of your working income—a target that maximizes retirement security.

The $1 Million Question

When asked about million-dollar retirement plans, Americans reveal deep pessimism. 38% believe it’s “impossible” to retire with $1 million in a 401(k), and fewer than 2% currently report having reached this threshold.

Interestingly, Gen Z bucks this trend: 22% believe they’ll achieve a seven-figure balance by retirement. That confidence is justified—a 22-year-old investing consistently until age 67 needs to contribute only $2,600 annually (with an 8% return). Someone waiting until 32 to start would need $5,800 annually for the same result.

The Contribution Reality

Understanding how much you can contribute to your 401(k) is foundational to any retirement strategy. Yet only a fraction of workers optimize this opportunity. The survey found that older millennials show particular uncertainty—35% believe achieving $1 million is “impossible,” as do 42% of Gen X and 47% of those 55-64.

However, financial planners emphasize that discipline matters more than age. Matthew Cleary, CFP at a wealth advisory firm, notes: “The most important factor is saving early and often. Having a structured savings and investment process can genuinely compound into significant wealth.”

For those within 10 years of retirement, consulting a financial advisor becomes critical. A professional can review current contributions, spending patterns, and projected timelines to identify whether adjustments are necessary—and whether course correction is still possible.

The verdict: most Americans are undersaved for retirement, but the trajectory isn’t fixed. Starting early, understanding contribution limits, and maintaining discipline can still bridge the gap between current balances and retirement goals.

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