3 Numbers From a Recent Study Can Tell You if You're Meeting Retirement Savings Benchmarks

Vanguard recently unveiled its How America Saves 2025 report, which includes data for the hundreds of retirement plans (and millions of individual accounts) it administers. Although its clients represent just a small subset of the U.S. population, the report does offer investors a yardstick they can use to evaluate their retirement readiness. Here are the three numbers from the report that you'll want to focus on.

What is Vanguard looking at?

Vanguard provides tax-advantaged retirement accounts like IRAs, Roth IRAs, and 401(k) accounts, as well as standard brokerage accounts and mutual funds. However, the How America Saves 2025 report covers only defined contribution plans with the 401(k) making up the large majority of those plans. As a result, the data captures just part of the savings picture for the people included in the report. That said, the 401(k) is the largest retirement savings vehicle many people have, so the data is important; it just needs to be considered in context.

Image source: Getty Images.

There are two big places where you should focus with regards to your retirement goals. First, how much are you saving and investing for retirement? Second, how big is the nest egg you've built so far? Here's what the Vanguard data has to say about these topics.

How much are you saving?

In the world of finance, the percentage of your wages deposited into your 401(k) account with each paycheck is called the "deferral rate."

In 2024, only an estimated 54% of people under 25 years of age are contributing to their 401(k). Among this 54%, they contribute an average of 5.5% of each paycheck to their retirement plans. Workers who are 65 and older have a higher participation rate (79%) while setting aside nearly twice as much of each paycheck.

However, if you're just starting your career in your early 20's, you really shouldn't be comparing your financial strategy to that of someone so close to retirement. First, the 65-and-up cohort is probably making more money than the under-25 group, which allows them to increase their deferral rate. And second, the younger group has vastly more time until retirement.

With all that in mind, when you're looking at that table above, compare your personal deferral rate to that of your contemporaries. And remember, the earlier you start saving, the longer you'll have for your investments to benefit from the power of compound growth. It's wise to save and invest as much as you can early on, and to start as early as you can to build the habit. But don't go so overboard on saving for retirement that you forget to enjoy your life in the present.

How much have you saved?

Beyond your contribution rate, the next data point to consider is how much you have in your nest egg. For this data, there's additional nuance to consider: You want to look at both the median and the average for people in your age group while understanding what each of these metrics is telling you.

The median is the midpoint of a range, so half of the numbers in it are higher and half are lower. The average adds up all of the numbers and then divides the sum by the number of points being considered. In the context of the Vanguard report, medians usually wind up being lower because the averages are skewed higher by a relatively small number of prosperous outliers.

For example, the average savings of 10 people who each have 401(k) balances of $100,000 is $100,000. But if you make just one of them a millionaire, the average lurches up to $190,000, even though nine of the people in that group don't have nearly that much while only a single person has far more. Meanwhile, the median for that group of 10 would still be $100,000.

So, if your balance is at or above the median for your age, you're doing fine, relatively speaking. If you hit the average or beat it, congratulations -- you're far ahead of most of your peers.

Data source: Vanguard.

It's no surprise younger people tend to have smaller account balances than older ones. This again highlights why you should focus on your age group, not the group that happens to have the most money set aside for retirement. But the ability to look at the bigger picture can help you with your longer-term agenda. You can use the groups ahead of you to set financial targets for yourself.

For some investors, aiming for a hard goal is more effective than taking a nebulous "save as much as you can" approach. If hard numbers motivate you, then use this information to help shape your saving habits for the better.

And if you are the type of person who tends to put too much pressure on yourself, these numbers can also help you frame goals that are reasonable. For example, a $1 million 401(k) account may be a popular benchmark, but it's far more than the median and average for even the oldest people in the Vanguard report. 

Where do you stand?

Comparing your deferral rate and retirement account balance to the median and average numbers in Vanguard's report can give you a clearer picture of where you stand in your retirement planning journey. With any luck, your numbers are at or above the figures for your age group. But if they aren't, don't despair. Take it as a signal to start doing more while you have the opportunity.