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According to Fidelity, Americans aged 65 to 69 hold an average 401(k) balance of about $251,000. That figure tends to mark a high point, because balances often begin declining after this age as retirees start drawing down what they saved over a lifetime of work. In other words, 69 is roughly where saving ends and spending takes over.
The trouble with an average is that a small number of very high earners can pull the number upward and make the typical saver look more prepared than they are. Empower data from January 2026 shows the median 401(k) balance for people in their 60s sits at $187,249, well below the average. The median represents the middle saver, so it gives a clearer picture of where most people actually stand.
Why so many retirees feel stressed about money
Even retirees who saved diligently often feel uneasy once the paychecks stop. A balance of $200,000 to $250,000 has to stretch across decades, and the mental shift from building wealth to living off wealth can feel far less secure than a steady salary ever did.
Several pressures pile on at once and feed that anxiety:
- Rising health care costs that climb faster than general inflation
- Higher insurance premiums in retirement
- Persistent inflation that erodes fixed savings
- Longer life expectancies that lengthen the time money must last
- Concerns about market volatility hitting invested balances
How much weight Social Security really carries
For many households, Social Security does heavy lifting in retirement. The Social Security Administration reports that benefits replace around 40 percent of pre-retirement income for many middle-income households. That is meaningful support, but it is not a full paycheck replacement.
Some people saved less because they expected Social Security to cover their core expenses, and that assumption can become risky if costs rise faster than benefits. The more reliable approach combines Social Security with account withdrawals and other savings, so no single source has to carry the whole load.
Required withdrawals can reshape your taxes
Under current IRS rules, most retirees must begin taking required minimum distributions from traditional 401(k)s and IRAs at age 73. Those withdrawals count as taxable income, which means a forced distribution can nudge a retiree into a higher tax situation whether the money is needed or not.
Because of that, some savers adjust their withdrawal strategy in their late 60s to ease future required minimum distribution pressure. Others lean on Roth conversions or gradual withdrawals to spread out the tax impact rather than facing a large bill all at once. A Roth conversion moves money from a traditional 401(k) or IRA into a Roth account, where you pay taxes now in exchange for tax-free growth and withdrawals later. For those born in 1960 or later, the required minimum distribution starting age rises to 75 beginning in 2033.
Housing costs do not retire when you do
Paying off a mortgage is a milestone, but it does not end housing costs. Many people in their late 60s still carry property taxes, homeowners insurance, maintenance, HOA fees, and utilities long after the loan is gone.
Faced with those ongoing bills, some retirees choose to downsize to free up cash and cut upkeep. Others stay put for emotional reasons, valuing the comfort and memories of a longtime home over the savings a move might bring.
Health care is a bigger bill than most expect
Health spending is one of the largest and most underestimated costs in retirement. Fidelity reports that a single retiree will need $172,500 on average to cover health expenses across retirement, even with Medicare in the picture.
That is because Medicare does not cover everything. Retirees still face prescription drug costs, supplemental insurance premiums, dental and vision care, potential long-term care, and a range of out-of-pocket medical bills. Advisors caution against treating an entire 401(k) as freely spendable, since a meaningful slice is effectively earmarked for health care. Large withdrawals can also raise Medicare premiums through the income-related monthly adjustment amount, a surcharge on Part B and Part D that kicks in when income exceeds certain thresholds.
Why many Americans remain underprepared
The averages can mask how thin the cushion is for a large share of households. Federal Reserve data shows that many people nearing retirement have limited or no retirement savings, and some depend almost entirely on Social Security to get by.
That reality is a useful reminder that headline balances describe a slice of savers, not everyone. If your number falls short of the average, you are far from alone, and the more important question is whether your income can sustainably cover your expenses.
What a good balance actually depends on
There is no single magic number that signals you are ready to retire. A balance that works comfortably for one person may fall short for another with higher costs or a longer life expectancy ahead.
What matters more is the full picture: your monthly expenses, your guaranteed income, how long your savings can realistically last, and how much spending flexibility you have. Using the 4 percent guideline, a $250,000 balance supports roughly $10,000 in annual withdrawals, designed to last about 25 to 30 years. Stability comes from sustainable spending, not from hitting a headline figure.
Bottom line
Averages do not tell the full story of retirement readiness. Retirees have to balance health care costs, inflation, taxes, and longevity, and a single balance figure cannot capture all of that. Look beyond the headline numbers, and review your future tax exposure and monthly spending now so you can avoid money mistakes while you still have time to adjust.
Editor's Note: Portions of this story were drafted with assistance from generative AI tools. All final creative decisions, edits, and fact checking were done by human writers and editors.
