Record 401k savings hide a two-tier system

The larger disparity isn't in contribution rates, but in access. According to the Economic Innovation Group's analysis of Census Bureau data, 40.6 million full-time workers ages 18 to 65 lack access to any employer-provided retirement plan. Adding part-time workers raises that figure to 53.7 million Americans.

Access varies dramatically by income. Only 19.3% of low-income workers participate in employer-provided retirement plans, compared to 37.3% of all workers, according to Economic Innovation Group's 2023 analysis of Current Population Survey data. Even when low-income workers have access to a plan, participation lags: voluntary enrollment among those earning $15,000 or less sits at just 14%, according to Vanguard. Automatic enrollment boosts that to 77%, but higher earners enroll voluntarily at significantly higher rates.

The bifurcated system

The result is a bifurcated system. High earners with access max out contributions, benefit from employer matches, and watch decades of compound growth build substantial balances. Vanguard reports the average 401k balance reached $148,153 in 2024, but the median sits at just $38,176, revealing how averages are skewed by high-balance savers.

For low-income workers, multiple barriers compound, and part-time workers face even steeper odds: 79% lack access to any retirement plan, according to Economic Innovation Group's analysis. That research found that 86.1% of low-income workers who participate in retirement plans do so only because they receive an employer match. This suggests expanded access alone won't close participation gaps without matching incentives to encourage saving when every dollar counts toward immediate needs.

The record-high contribution rates reflect real progress for those in the system. A record 45% of Vanguard participants increased their deferral rates in 2024. Automatic enrollment now covers 76% of plans offering immediate contribution eligibility, up from 71% in 2020. Target-date funds simplified investing for 67% of participants. These design improvements work … for workers who have access.

But aggregate statistics mask structural inequality. When 53.7 million workers lack access entirely, when participation among low-income workers sits at 19%, and when maxing out remains rare below $100,000 in earnings, record-high averages tell a story of retirement security for some, not all.

The gap matters beyond individual retirement outcomes. Workers without 401k access can't benefit from employer matches, can't capture decades of tax-deferred growth, and face retirement with Social Security as their primary income source. The bottom 20% of households receive just 1.3% of federal subsidies designed to encourage retirement savings, according to Economic Innovation Group.

Progress is real, and more workers are saving more than ever. But the record highs are concentrated among those with access to plans, stable employment, and incomes that allow discretionary saving. For workers earning under $30,000, for part-time employees, and for the 53.7 million without access, the system's record performance remains mostly irrelevant.