Most working Indians and Americans alike are told that their expenses will reduce after retirement. While that’s true to an extent, it doesn’t mean you can afford to skip saving for your retirement.
In fact, even with Social Security benefits, you’ll likely need more than just government support to retire comfortably — especially if you earn an average income.
Recent data from Vanguard, one of the world’s largest investment firms, reveals a worrying reality for workers aged 45 to 54: Many are underprepared for retirement, with savings balances that fall far short of what they’ll likely need.
Why You Can’t Rely on Social Security Alone
Social Security is often seen as a safety net, but if you’re an average wage earner, your benefits will replace only about 40% of your salary. Most retirees, however, need at least 70% to 80% of their working income to maintain a decent standard of living.
That leaves a huge gap that personal savings — especially your 401(k) — needs to fill.
How Much Do Americans Aged 45 to 54 Actually Have in Their 401(k)?
According to Vanguard’s 2024 report:
Average 401(k) balance (age 45–54): $188,643
Median 401(k) balance (age 45–54): $67,796
That’s a massive difference, and here’s why it matters:
The average is pulled up by a small group of high savers. But the median tells a more accurate story of what the typical person actually has — and $67,796 is not enough for someone nearing retirement.
Here’s what that number could mean in real terms:
| Age | Years Until Retirement (at 67) | Median 401(k) Balance |
|---|---|---|
| 45 | 22 years | $67,796 |
| 54 | 13 years | $67,796 |
For someone in their mid-50s, time is running out — and unless action is taken, many could face financial challenges later in life.
Why Saving Is Tougher Today — But Still Necessary
Let’s be honest — saving isn’t easy, especially when you’re dealing with:
High inflation
Rising utility, fuel, and grocery bills
Loan repayments and family responsibilities
But despite the challenges, starting or increasing your savings today can make a major difference. Even small changes add up over time.
How to Catch Up If You’re Behind
If you’re between 45 and 54, and your retirement savings aren’t where you want them to be, here are practical steps to improve your situation:
Maximise your employer match: If your company offers a 401(k) match, contribute enough to get the full benefit — it’s essentially free money.
Save your salary hikes: Every time you get a raise, try to increase your retirement contribution — even just 1% more can help.
Start a side hustle: Extra income from freelance work or part-time gigs can be used entirely for saving.
Review your investments: Check your 401(k) for hidden fees or poor-performing funds. Make sure your money is working smart.
Use catch-up contributions: If you’re 50 or older, you can contribute extra to your 401(k) each year. In 2025, the catch-up limit is $7,500 on top of the regular limit.
It’s Not Too Late to Turn Things Around
Having a 401(k) balance of $67,796 may not feel like much, but it’s still a start — and it’s better than nothing. The key is to start acting now, even if retirement feels far away.
With consistency and smart planning, you can build up a strong financial base for your future.
Bonus Tip: Social Security Strategies Can Help
Many retirees overlook strategies that can boost their Social Security income. For example:
Delaying benefits past your full retirement age (up to 70) increases your monthly payout.
Coordinating spousal benefits can maximise total household income.
Working a few more years at higher pay can increase your benefit calculation.
If you’re nearing retirement age, it’s worth looking into these lesser-known tactics.
