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It’s not every day that personal finance makes headlines, but recently, Tony Robbins urged Americans to rethink their retirement savings, warning that relying on traditional 401(k)s and IRAs alone could leave future retirees vulnerable. His rallying cry: take charge now, convert to Roth accounts where it makes sense, and aim for a retirement nest egg that’s 20 times your annual spending.
It’s powerful advice, but beyond the soundbites, where do Americans truly stand when it comes to 401(k) health? And what does the latest data suggest about the road ahead? Let’s break down the numbers, the challenges, and the opportunities.
Balances are growing, but most fall short of recommended targets
Recent data from major plan administrators, such as Fidelity and Vanguard, show that the average 401(k) balance has climbed steadily. According to Fidelity’s Q1 2025 Retirement Analysis, the average 401(k) balance is about $125,900, up slightly from last year, thanks to strong market performance in 2023 and early 2024.
But averages tell only part of the story. Median balances, meaning half of savers have less, are much lower:
- Gen Z savers (ages ~20–26): median $8,100
- Millennials (ages ~27–42): median $42,100
- Gen X (ages ~43–58): median $99,900
- Baby Boomers (ages ~59–77): median $209,400
For comparison, Fidelity suggests that by age 40, a saver should aim to have 3× their annual salary put away for retirement. By 50, that target jumps to 6×, and by 60, 8×. The reality is that although many workers are behind, the savings rate, which represents the combined contributions of employees and employers, has increased to a healthy 14.3% average, which is encouraging.
Fees are coming down, but they still matter.
One of Robbins’ points about 401(k)s — that fees can quietly eat away at gains — holds water. Department of Labor studies show that even a 0.5% higher fee can reduce retirement savings by tens of thousands of dollars over time.
The good news? The average fee for large-plan participants has dropped closer to 0.45% to 0.60%, thanks to fee compression and greater use of low-cost index funds. However, smaller plans often still charge higher fees, sometimes 1% or more. That difference, on a six-figure balance over 30 years, could mean the loss of $100,000 or more in potential growth.
Savvy savers should review their plan’s expense ratios and consider their options, like rolling over old 401(k)s to lower-cost IRAs or consolidating accounts for better oversight.
Market performance: a mixed picture
401(k) investors have seen strong returns recently. In 2023, it delivered an average return of nearly 17%, driven by a bull run in tech and large-cap equities. However, Q1 2025 has been more subdued, with markets adjusting to shifts in interest rate policy and global uncertainty. Long-term, most analysts project 5% to 8% average annual returns for balanced 401(k) portfolios, depending on asset allocation.
It’s worth noting that despite criticisms, over the past five years, 401(k)s have generally outperformed many hedge funds and actively managed alternatives, offering reliable, if unspectacular, compounding for consistent contributors.
What savers can do now
Whether you’re just starting out or nearing retirement, a few strategies can help strengthen your retirement plan:
- Max your employer match — Many companies match up to 4%–6% of pay. Failing to contribute enough to capture the full match is leaving free money on the table.
- Benchmark your fees annually — Look for expense ratios under 0.50% where possible.
- Stay consistent — Market ups and downs will happen; consistent contributions beat market timing.
- Consider Roth options — Roth 401(k)s or IRAs can provide valuable tax diversification, particularly for younger or higher-earning savers.
- Watch rollover timing — Leaving old accounts scattered can lead to higher fees and lost growth. Consolidate smartly.
Final thoughts
Tony Robbins’ call for Americans to take action on retirement is timely, but the real path to retirement security isn’t about fear; it’s about data, discipline, and ongoing review. The tools are there. The question is: are we using them?
Sources
Fidelity Q1 2025 Retirement Analysis
Vanguard: How America Saves 2024
Department of Labor
Investopedia
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