The One Retirement Number That Actually Matters (It Is Not the Average)

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When people search for the “average” retirement savings balance, they often find a number that looks impressive and feels discouraging. The problem is not necessarily the data. The problem is that the average can describe a financial reality very few households actually experience.

Distinctive Value: The Two-Number Test

Before you compare your retirement savings with any statistic, ask two questions:

1. Which median is it? Is the number calculated only among households that own retirement accounts, or across all households?
2. Does the count include households with zero saved?

If a retirement statistic does not answer both questions, it may be technically accurate but personally misleading.

Quick Answer

The median is usually more useful than the average for understanding what a typical household has saved. But even the median can mislead if you do not know who was included.

According to the Federal Reserve’s 2022 Survey of Consumer Finances, roughly 54% of U.S. households owned retirement accounts. Among those households, the median retirement account balance was about $87,000, while the average was about $333,940.

When all U.S. households are counted, including those with no retirement savings, the median falls to roughly $13,000.

So the most important number is not simply $87,000, $333,940, or $13,000. It is the median that matches your situation.

Why the Average Retirement Balance Looks So High

An average, also called a mean, is calculated by adding every balance together and dividing by the number of households.

That method gives every dollar equal weight. It also makes the average highly sensitive to a small number of very large accounts.

Suppose a retirement survey includes a few households with balances in the millions. Those accounts add a great deal to the total, even though they represent a small share of the households surveyed. The result is an average that rises far above what most households have.

The Federal Reserve itself notes that medians are often less affected by unusually large values. This is particularly important for financial assets because wealth is concentrated among a relatively small part of the population.

The average can still be useful. For example, policymakers may use averages to compare total assets across groups. But if you are asking, “How much does a typical household have saved?” the median generally gives a more representative answer.

Illustrative math: How large accounts distort an average

Illustrative example only. These numbers are hypothetical and are not additional survey data.

Imagine 11 households:

• Six households have $0 saved.
• Four households have $50,000 saved.
• One household has $1,000,000 saved.

The total savings is $1,200,000. Divided across 11 households, the average is about $109,091.

But the median household has $0 because the middle household in the ordered list has no retirement savings.

Now look only at the five households with retirement accounts:

• Four households have $50,000.
• One household has $1,000,000.

Among account owners, the average is $240,000, while the median is $50,000.

That is the central lesson. The average is pulled upward by the large account. The all-household median is pulled downward by households with no retirement savings. The account-owner median sits between those two figures because it describes a different group.

The Three Retirement Savings Numbers You Need to Recognize

1. The average among account-owning households

The Federal Reserve reported an average retirement account balance of about $333,940 among households that owned retirement accounts in 2022.

This number reflects the combined value of retirement accounts, including individual retirement accounts and certain employer-sponsored accounts. It does not mean that a typical account-owning household has nearly $334,000 saved.

A relatively small number of large balances can raise the average substantially.

2. The median among account-owning households

Among the roughly 54% of households that owned retirement accounts, the median balance was about $87,000.

This means half of account-owning households had less than that amount and half had more. It is a better description of a typical retirement account owner than the $333,940 average.

However, it still excludes the roughly 46% of households that did not own a retirement account at the time of the survey.

3. The median across all households

When households with no retirement savings are included, the median falls to roughly $13,000.

This is not a contradiction. It answers a different question: how much retirement savings does the middle household have when every household is counted?

That figure may be more relevant if you are comparing your household with the broader U.S. population. The $87,000 figure may be more relevant if you already own a retirement account and want to compare yourself with other account owners.

Why This Distinction Matters in Real Life

A misleading comparison can affect your decisions in two opposite ways.

If you compare yourself with the $333,940 average, you may conclude that you are far behind and need to take drastic risks. That could lead to aggressive investments, excessive contributions that strain your cash flow, or unnecessary anxiety.

If you compare yourself only with the $13,000 all-household median, you may feel comfortable even though your retirement timeline, income needs, or expected lifestyle require more preparation.

Neither statistic is a personal retirement target.

The Federal Reserve data also does not include every source of retirement income. Retirement account balances are different from Social Security benefits, defined benefit pensions, home equity, taxable investments, annuities, or income from work.

That is why a retirement plan should connect your savings with your expected spending. A household with $87,000 in retirement accounts may have a pension and low housing costs. Another household with $500,000 saved may have higher expenses, substantial debt, or no guaranteed income.

The balance is important, but it is not the entire plan.

What This Means for You

Use the median that matches your situation

If you have a 401(k), IRA, or similar account, compare yourself first with the median among account-owning households. If you are comparing your household with the overall population, use the all-household median and remember that it includes zero-balance households.

Do not use the average as your primary benchmark unless you understand why it is so much higher.

Separate comparison from planning

A national statistic can provide context, but it cannot tell you whether you are on track. For that, start with your own numbers:

• Estimate your annual retirement spending.
• Identify expected income from Social Security, pensions, annuities, and other sources.
• Calculate the gap your investments may need to cover.
• Review your current retirement contributions and employer match.
• Consider your time horizon, investment mix, taxes, and debt.

ATMC’s retirement budgeting guide can help you estimate future spending. You can also review retirement financial planning strategies and retirement income planning before relying on a national savings benchmark.

Track progress in dollars and percentages

A household saving $500 per month may be making meaningful progress even if its current balance is below the median. Look at both the account balance and the percentage of income being saved.

Also review your progress over time. A single balance tells you where you are today. A contribution rate, investment allocation, and growing balance tell you more about whether your plan is moving in the right direction.

Avoid letting comparison create urgency without strategy

If your savings is below a benchmark, the answer is not automatically to invest more aggressively. First look for practical improvements:

• Increase contributions gradually when income rises.
• Capture the full employer match if available.
• Eliminate high-interest debt that competes with retirement saving.
• Keep an emergency reserve so you are less likely to raid retirement accounts.
• Review investment fees and diversification.
• Revisit your retirement budget as your housing, health, and family expenses change.

FAQs: Average vs. Median Retirement Savings Explained

Is the median better than the average for retirement savings?

Usually, yes, if you want to understand what a typical household has saved. The median is less affected by a small number of very large accounts. You still need to know whether the median includes all households or only households with retirement accounts.

What was the median retirement account balance in the 2022 Federal Reserve survey?

Among households that owned retirement accounts, the median balance was about $87,000. Across all households, including those with no retirement savings, the median was roughly $13,000.

Why is the average retirement balance about $333,940?

The average includes every account-owning household, including households with unusually large balances. Those high balances raise the total amount of savings and pull the average well above the median.

Does the retirement savings data include Social Security?

No. The retirement account figures focus on account balances such as IRAs and certain employer-sponsored plans. Social Security, defined benefit pensions, home equity, and other potential retirement income sources are separate.

How can I tell whether my retirement savings are on track?

Compare your expected retirement spending with projected income from Social Security, pensions, investments, and other sources. Then review your contribution rate, investment strategy, debt, taxes, and retirement timeline rather than relying on one national statistic.