"401(k) savings rates are up!" That's the kind of headline that grabs attention, and sure enough, the Wall Street Journal ran with it this week. Fidelity’s latest report shows the average 401(k) savings rate—counting both employee and employer contributions—has reached 14.3%. Not bad, right?
Still, I’ll admit, reading that made me pause. As a financial planner, even I had a moment of self-doubt: Am I doing enough? Should I be saving more? Are other people just better at this than I am?
But then I stopped and remembered something we all need to keep in mind: averages don’t tell the whole story.
A Financial Whiplash Moment
Earlier this week, I read another article—this one about “buy now, pay later” services. Not for big splurges, but for everyday items like groceries. I talked about it with two of my kids, and they were quick to point out: for some people, this is a way to cover basic needs, not just stretch a budget.
One couple in the article used it to smooth out income from their self-employment gigs. As someone who’s worked with all kinds of clients, this hit home. I’ve seen how fragile things can get when income is unpredictable or life throws a curveball. And I felt grateful—relieved, even—that I’m not currently juggling personal debt.
It got me thinking: How do these two stories—the rise in retirement savings and the rise in short-term borrowing—coexist? What are we missing?
The Skewed View from the Top
Let’s circle back to that 14.3% savings rate. It’s an average, and that’s a red flag. High-income earners with ample room to save are pulling that number up. Many are maxing out contributions and getting generous matches from their employers.
But what about everyone else?
According to Vanguard’s How America Saves report, the median 401(k) balance is just $27,376. The median contribution rate? Around 6.4%, without employer match. That’s less than half of what most financial advisors recommend. Vanguard also breaks down savings participation by income—and, not surprisingly, the lower your income, the less likely you are to be enrolled. Life gets in the way.
So yes, some people are saving a lot. But the majority? Not nearly enough.
Why This Matters
I live and work in Maryland, and a study out of Georgetown University found that 45% of Maryland workers don’t have access to a retirement plan through their employer. That’s almost half. That’s staggering.
We’re a nation built on opportunity—or at least that’s the idea. But if nearly half the workforce is shut out of one of the most basic tools for long-term financial security, something’s off. People want to make good choices with their money and their time. But you can’t save what you don’t have—or what you can’t access.
If someone’s barely keeping up with rent, groceries, and gas, how can we expect them to stash away 15% of their income? We need to start thinking bigger:
- Can we expand access to savings plans?
- Can we make saving feel safer, especially for those living paycheck to paycheck?
- Can we give people more control over their money now, so they’re more willing to invest in their future?
What’s Next
In my next post, I’ll dive into a potential solution: the MarylandSaves program. It’s a state-run savings plan that gives people a way to invest for retirement—even if their employer doesn’t offer a plan. What makes it especially interesting is that savers can withdraw their contributions without penalty in an emergency. That kind of flexibility might be exactly what people need to get started.
Because let’s be honest—retirement planning shouldn’t feel like an impossible luxury. It should feel like something everyone can do.
Are We Really Saving More for Retirement? A Closer Look at the Numbers
