Vanguard’s review of 5 million retirement accounts reveals an unsettling average 401(k) detail. Is yours at risk?

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Each year, one of the nation’s largest asset managers releases a snapshot of how Americans are saving for retirement. In Vanguard’s latest How America Saves report, there is some encouraging news: retirement balances are rising.

By the end of 2025, the average 401(k) balance among nearly 5 million retirement plan participants had climbed about 13%, helped in part by stock market gains. The average account held $167,970 — a solid figure, though not necessarily enough to support a comfortable retirement.

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That might sound like progress across the board. But a closer look suggests many savers are much further behind than the average number implies.

In other words, the typical 401(k) balance is not even high enough to match the cost of an average new car — and there are steps you can take to improve your own outlook.

The retirement savings gap

Average balances can be misleading because a small number of very wealthy savers can pull the figure upward.

Some Americans have more than $1 million in retirement accounts. According to Empower data, users of its Personal Dashboard with at least $1 million in their 401(k)s had an average balance of about $1.26 million as of June 30.

By contrast, Vanguard said the median 401(k) balance at the end of 2025 was just $44,115. That is less than the average price of a new car, which reached $50,562, according to Kelley Blue Book.

The uncomfortable takeaway is that half of the people in Vanguard’s retirement plans had less than $44,115 saved. That does not automatically mean they are unprepared for retirement — age, other savings and expected retirement income all matter — but it shows how much an average can overstate the typical saver’s position.

If your balance is in the lower half of that range, there are still practical ways to get back on track.

Start building your retirement savings

Once you know your retirement nest egg is behind where you want it to be, there are several ways to change course.

One of the easiest is to invest consistently, even if you can only put away a little at a time.

If you want a simple way to begin, Acorns is an investing app that can automatically invest your spare change.

Here’s how it works: sign up and link your debit or credit cards. Then, whenever you make an eligible purchase, Acorns rounds the total up to the nearest dollar. A $3.25 coffee, for example, becomes a 75-cent contribution to your financial future.

That money is then invested in a diversified portfolio of ETFs matched to your goals and risk tolerance. Acorns also offers custom portfolios that let you invest in specific parts of the economy, including heavy industry, energy, consumer staples and utilities.

After you get used to round-ups, you can expand the habit by setting recurring investments. Acorns also offers Acorns Later, which is designed for retirement saving through an IRA.

And if you sign up with a $5 recurring deposit, Acorns will add a $20 bonus to help you get started.

Make the most of your existing 401(k)

Before opening another account, make sure you are using the retirement plan you already have as fully as possible.

If your employer offers automatic enrollment, consider opting in. Automatic contributions make saving the default instead of a choice you have to revisit every payday. Pair that with automatic annual increases, and your contribution rate can rise gradually over time.

It is also worth checking whether your employer offers matching contributions. If it does, contributing enough to capture the full match can give your retirement savings an immediate lift.

Another approach is to increase your contribution rate whenever you get a raise. Even directing a small portion of extra income toward retirement can add up over time.

And for those nearing retirement, catch-up contributions can help boost savings.

For 2026, the IRS allows employees to contribute up to $24,500 to most 401(k) plans. Workers age 50 and older can generally contribute an additional $8,000, while those ages 60 through 63 may qualify for a higher catch-up limit of $11,250.

These strategies will not erase years of under-saving overnight, but they can help you make better use of the retirement benefits already available to you.

Find out whether you are on track for retirement

Knowing how much you have saved is only part of the picture. The more important question is whether that amount can support the retirement lifestyle you want.

A 30-year-old with $44,000 saved is in a very different situation from a 60-year-old with the same balance. Your timeline, expected expenses, Social Security benefits and other investments all shape how much you will ultimately need.

That is one reason professional guidance can be valuable.

A financial advisor can help run the numbers, identify possible gaps and build a retirement plan tailored to your circumstances.

Finding a trustworthy advisor matters, especially when someone is helping shape your financial future.

That is where Advisor.com may help. The platform connects you with an expert near you for free.

Advisor.com screens advisors based on track record, client ratios and regulatory background. Its network also includes fiduciaries, who are legally required to act in your best interests.

After you share a few details about your finances and goals, Advisor.com’s AI-powered matching tool connects you with a qualified professional suited to your needs.

There is no one-size-fits-all solution, so Advisor.com also lets you schedule a free initial consultation with no obligation to hire anyone, helping you decide whether the match is right for you.

Once you have the right advisor in your corner, the next step is understanding exactly where your money is going. That begins with basic budgeting and spending-tracking.

Explore retirement investments beyond your 401(k)

If you already have meaningful retirement savings, you may also want to consider whether your current accounts offer enough investment flexibility.

Traditional workplace 401(k) plans usually limit participants to a set list of funds. While those funds can provide diversified exposure to stocks and bonds, investors who want access to other asset classes may want to look elsewhere.

A self-directed retirement account can open the door to alternative investments, although those options can carry additional risk, fees and complexity.

IRA Financial allows investors to hold alternative assets such as real estate, private equity, precious metals and crypto in a self-directed retirement account. It also now offers real-time public market investing powered by Interactive Brokers, a global brokerage.

That means you can manage both traditional and alternative assets in one self-directed retirement structure for a flat fee.

You can complete the application online in minutes to open a self-directed retirement account with stock-trading access powered by Interactive Brokers.

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Article Sources

Workplace Vanguard (1); Empower (2); Kelley Blue Book (3); IRS (4)