Overview
- Vanguard reported on July 4 that the average 401(k) balance hit $167,970 at year-end 2025 while the median stood at $44,115, showing a large gap driven by a small share of very large accounts.
- Plan participation has risen to about 86 percent because of automatic enrollment and auto‑escalation, but those access gains have not closed the shortfall in actual retirement adequacy for most workers.
- The IRS raised 2026 contribution limits and SECURE 2.0 opened a temporary super catch‑up window that lets 60–63 year olds put up to $35,750 in a year, yet catch‑up use is concentrated among higher earners with 52 percent of those earning $150,000+ using them versus under 1 percent for those under $30,000.
- Hardship withdrawals have climbed for six straight years to roughly 6 percent of Vanguard participants in 2025 with a median withdrawal of about $1,900, a trend linked to the 2018 Bipartisan Budget Act change that eased access to emergency distributions.
- Rising inflation and health costs have eroded purchasing power and left a $1 million nest egg producing about $40,000 a year under the 4 percent rule, which is far below average U.S. household spending and raises the risk that workers will claim Social Security earlier or further drain retirement accounts.