Vanguard Says This Is the Median 401(k) at 65. Here’s Why Having Double It Still Isn’t Safe

Vanguard’s How America Saves 2025 puts the median 401(k) balance for participants age 65 and older at $95,425, based on year-end 2024 balances. Vanguard reports the average for that same group at $299,442, which is more than three times the median.

For this age group, the median is the more useful number. A small number of very large accounts pull the average up. In Vanguard’s data, the median is the saver in the exact middle, showing what a typical 65-year-old has. For comparison, Vanguard’s median across all participants was $38,176.

Now say you’ve saved double the median, or $190,850. That places you ahead of most people your age. It still leaves you exposed.

What Double the Median Pays You Each Year

Under the classic 4% rule, $190,850 supports $7,634 of first-year income. That works out to about $636 a month.

Add the average retired worker’s Social Security benefit of $2,071 a month after the 2026 COLA, which is $24,852 a year. Your total comes to roughly $32,486 before taxes and healthcare. For anyone leaving a middle-class career, that’s a steep drop in income.

Withdrawing More to Close the Gap Raises Your Tax Bill

The obvious fix is to take more out of the 401(k). But every traditional 401(k) dollar counts as ordinary income, and it also feeds the formula that determines how much of your Social Security gets taxed.

Benefits start becoming taxable once provisional income (roughly AGI plus half your Social Security) passes $25,000 for single filers or $32,000 for joint filers under 26 U.S.C. § 86(c).

Above $34,000 single or $44,000 joint, up to 85% of benefits can be taxed. These thresholds have never been indexed for inflation.

A single retiree collecting the average benefit crosses that first line after about $12,574 in 401(k) withdrawals. Beyond that point, each extra dollar you take is taxed once on its own and again through the Social Security benefits it makes taxable. Medicare’s IRMAA surcharge only starts above $109,000 of single income, so at this balance the hidden tax on your benefits is the bigger threat.

Four Risks Working Against a $190,850 Cushion

1. Longevity. A 65-year-old Vanguard participant who lives to 90 needs it to last 25 years. The 4% rule was tested over 30-year retirements, and a smaller account leaves little room for a bad decade or a big unexpected bill.
2. Inflation. The research CPI for Americans 62 and older rose 3.6% over the past year. That’s faster than the 2.8% COLA applied to 2026 benefits. The 3.6% COLA for 2027 catches up, but the purchasing power lost in the meantime never comes back.
3. Healthcare. Medicare Part B costs $202.90 a month in 2026, or about $2,435 a year per person. On top of that, the Part A hospital deductible is $1,736. All of it comes out of the same modest withdrawal.
4. Sequence of returns. Vanguard says participants 65 or older had a median equity allocation of 50%. That’s too little stock to grow much over 25 years but plenty to hurt in a crash.

   For example, a 30% drop in stocks during your first year cuts about $28,628 from the stock half. If you keep taking $7,634, you’re now withdrawing roughly 5% of what’s left.

Your 401(k) Is Only One Line on Your Balance Sheet

Many people roll old 401(k)s into IRAs, and Vanguard’s plan data doesn’t include those accounts. Federal Reserve data shows that households age 70 and older hold 26% of all defined benefit pension entitlements, alongside large amounts of home equity and brokerage assets. A pension, a paid-off home, or a spouse’s benefit can change your picture completely. Judge your 401(k) balance against your whole household.

Three Moves to Make Before or Right at Retirement

1. Build your income floor on paper. Add your Social Security estimate from ssa.gov to a 4% draw on all of your retirement accounts combined. Then compare that total with your real spending, including Part B. The gap between the two is the number to plan around.
2. Check where withdrawals push your provisional income. If your planned withdrawals would cross the $25,000 or $32,000 base amount, consider taking more heavily in the years before you claim Social Security. Once benefits start, those same withdrawals would make part of your benefit taxable.
3. Keep one to two years of withdrawals in cash or short-term bonds. A cash reserve means a market drop never forces you to sell stocks at a loss in your first years of retirement.

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