Americans tend to underestimate their true retirement wealth — but that could leave you working longer than needed
Americans tend to underestimate their true retirement wealth — but that could leave you working longer than needed.
When it comes to news stories about how much Americans have saved for retirement, the tone is almost always doom and gloom.
The typical message is that Americans are underprepared for retirement, don't have enough savings to last and will need to keep working longer — if not indefinitely.
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If you look at the data on how much a typical American has saved in their retirement accounts, the numbers show cause for concern. According to Fidelity's Q1 2026 analysis of retirement savings trends, the average 401(k) balance is $141,000 (1).
However, looking at your retirement account balance alone can skew the picture, as some Americans might not be taking their true retirement wealth into account. Daniel Burnside, finance professor at the University of Rochester's Simon School of Business, told U.S. News & World Report that "Most people probably do underestimate the assets that they have."
With this in mind, some retirees or older Americans nearing retirement could have extra money that hasn't yet been factored into their retirement equation. "That could help avoid the dreaded 'one more year syndrome,' in which people put off retirement indefinitely to save just a little more," U.S. News & World Report (2).
Of course, looking only at average 401(k) balances does not give the full picture of how prepared Americans are for retirement. Fidelity notes that it's difficult to get an accurate overall picture of how much Americans in each age group have saved (3), arguing that "people may have more than one retirement account, or money saved outside of 401(k)s and IRAs."
"Real estate, brokerage accounts, savings accounts, non-retirement CDs — and even health savings accounts — could all be earmarked for someone's retirement," Fidelity notes.
When broken down by age groups, Fidelity reported that the average 401(k) balance for Americans were:
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If someone retiring at 67 had the average 401(k) balance of $258,800 and they were following the 4% rule for drawing down their savings, they would only withdraw $10,352 in their first year of retirement, which wouldn't likely be a livable retirement income.
Of course, there's another source of retirement income to consider.
The average Social Security benefit for retired workers in May 2026 was $2,082.76 (4). According to U.S. News & World Report (2), that would amount to about half a million dollars over a 20-year retirement, not including annual cost-of-living adjustments.
"Those receiving the maximum monthly payment, which varies based on earnings and retirement age but is $5,181 for someone who retired at 70 in 2026 and earned the taxable maximum, could easily see their total benefits cross the $1 million mark," says U.S. News & World Report.
However, only a small fraction of Americans — less than 1% (5) — receive the maximum Social Security benefit.
It's also worth noting that there can be a marked difference between the calculations of the average amount individuals hold in retirement accounts and the median amount. Vanguard's most recent analysis of defined contribution plans found that while the average was $167,970, the median was $44,115 (6).
