The median 401(k) balance was actually lower in 2018 than it was in 2007.
Vanguard recently released its 2019 edition of “How America Saves.” This excellent publication summarizes the statistics for the defined-contribution plans that the company administers. Vanguard tends to administer larger plans, so they are often better designed than average, and participants typically have higher incomes. In other words, it presents the best face of the 401 system.
The figure below shows average and median balances for the last 12 years in 2018 dollars. In terms of medians, 2018 is actually lower than 2007. This pattern could well reflect the expansion of auto enrollment, which increases participation but also produces smaller balances. That is, more people save, but because employees are typically enrolled at a default contribution rate of 3% the accumulations are small.
Clearly, we have not made a lot of progress in terms of 401 saving. And Vanguard balances are probably higher than average, given that it administers a large number of big plans. On the other hand, many people approaching retirement have moved some 401 balances over to individual retirement accounts, or IRAs.
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