[0:00] A record number of Americans are now
[0:01] carrying credit card debt that they
[0:03] can't pay down. More Americans are
[0:05] tapping into their 401ks for
[0:08] emergencies. Costs are high. Americans
[0:10] are struggling. Inflation is outpacing
[0:13] folks paychecks.
[0:14] >> A family of four now needs nearly
[0:16] $140,000 a year just to survive.
[0:19] >> Well, what if people just don't pay it?
[0:22] >> What's up, guys? It's Graeme here. So,
[0:23] I'm going to show you exactly how much
[0:25] money everyone else has in 2026 and then
[0:28] exactly where you rank. Because once you
[0:31] see the actual numbers, you'll realize
[0:33] that a lot of people are quietly falling
[0:35] behind and they don't even know it yet.
[0:38] Like, to put this into perspective,
[0:39] Vanguard just released a brand new
[0:42] report that tracks the retirement
[0:43] accounts of nearly 5 million people. And
[0:46] on the surface, the average person now
[0:47] has $167,000
[0:50] stashed away in retirement. Except that
[0:52] number is basically a lie because the
[0:54] typical American, the person right in
[0:56] the center, has just $44,000. And worst
[0:59] of all, one in four people have less
[1:02] than $10,000. Well, one in 10 have zero
[1:05] or negative net worth to their entire
[1:07] name. That's why we really got to break
[1:09] down how much money people actually
[1:10] have. The one secret that's quietly
[1:13] turning everyday people into
[1:14] multi-millionaires, and then most
[1:16] importantly, what you could do about
[1:18] this starting today to come out ahead.
[1:21] Because if this trend continues, the
[1:23] next crisis won't be people losing money
[1:25] in the stock market. It'll be people in
[1:27] their 20s and 30s realizing that they
[1:29] can't afford a house, they can't afford
[1:31] kids, they can't afford an emergency,
[1:33] and somehow they still can't afford to
[1:36] stop working. Although, before we start,
[1:38] as usual, if you appreciate the
[1:39] breakdowns like this, it would mean the
[1:41] world to me if you hit the like button
[1:43] and subscribed if you haven't done it
[1:44] already. Yes, I know it's the millionth
[1:46] time I've asked, but it does help
[1:48] tremendously and is a huge thank you for
[1:50] doing that. Here's a picture of Karen.
[1:52] So, thanks so much and also big thank
[1:53] you to Rocket Money for sponsoring this
[1:54] video. But more on that later. All
[1:56] right, so before we talk about how much
[1:58] the typical American has saved, why
[2:00] people are falling behind, and then what
[2:02] you could do about it, we need to talk
[2:04] about the savings crisis. For those
[2:06] unaware, every year, Vanguard analyzes
[2:08] the real accounts of 5 million Americans
[2:11] to put together what is basically a
[2:13] financial X-ray of the entire country.
[2:16] With this, we're able to see exactly how
[2:17] much money people are putting away for
[2:19] retirement, exactly where they're
[2:21] investing, and what they do when the
[2:23] market goes crazy. And when it comes to
[2:25] that, the 2026 report is pretty
[2:28] shocking. Why? Well, as it turns out, we
[2:30] have some really good news and some
[2:32] really bad news. We'll start with the
[2:33] good news first. Believe it or not,
[2:35] Vanguard says we have what's called a
[2:37] retirement revolution because 25 years
[2:40] ago, only 65% of workers bothered to
[2:42] participate in their 401k. But today,
[2:44] that number just hit a record 86%. On
[2:47] top of that, the savings rate of those
[2:49] people has just hit an all-time high of
[2:52] 12.1%.
[2:53] Again, on paper, this is really great.
[2:56] But in terms of the bad news, this is
[2:58] what the headline misses. Even though
[3:00] the average person has a 401k balance of
[3:02] $167,000,
[3:05] in reality, the average takes everyone's
[3:07] balances, adds them up, and then divides
[3:10] by that number of people, which means
[3:12] those results are skewed by a small
[3:14] number of multi multi-millionaires.
[3:16] Like, if I'm in a room with Elon Musk,
[3:19] our average net worth is closer to $550
[3:22] million, even though me personally, I'm
[3:25] closer to zero than I am 550 million.
[3:28] That's why to get an accurate
[3:29] understanding of these numbers, it's a
[3:31] lot more important to look at what's
[3:32] called the median, the person standing
[3:35] right in the middle. And in this report,
[3:37] the median person had less than a third
[3:39] of the average at just $44,000.
[3:42] So the next time you see a headline
[3:44] celebrating that Americans have record
[3:46] 401k balances, they're really describing
[3:48] a very wealthy group at the top and
[3:51] conveniently leaving out everybody else.
[3:53] So, in terms of just how big this gap is
[3:55] growing and why some people are making
[3:57] so much more money than others, we need
[3:59] to talk about exactly where people are
[4:01] investing. And to do that, this brings
[4:03] me to the breakdown by age. Now, here's
[4:06] where things get really interesting. In
[4:08] terms of where people are investing,
[4:10] despite what you might see, most people
[4:13] are not buying IPOs, meme stocks, and
[4:15] cryptocurrency with their retirement.
[4:17] Instead, roughly 70% of people are in
[4:20] what's called a professionally managed
[4:22] allocation, and about 61% of people are
[4:25] in a single target date index fund with
[4:27] nearly two out of every $3 being
[4:29] invested in this way. However, here's
[4:31] where things get pretty disappointing.
[4:33] Because when you break down the balance
[4:34] by age, the gap between the median and
[4:37] average becomes way too big to ignore.
[4:40] Like first, for people aged 55 to 64,
[4:43] the median 401k balance is only around
[4:46] $95,000, which might seem like a lot
[4:49] until you consider that a 4% withdrawal
[4:51] rate, which is considered the safe
[4:53] amount that you'd be able to spend in
[4:55] retirement without running out of money,
[4:56] only gives you $3,800 a year in
[4:59] spending, or $317
[5:02] a month to spend in retirement after
[5:06] working for 40 years. Of course, in
[5:08] fairness, these numbers could be low
[5:10] because some Americans are already
[5:12] drawing down from their 401k. This
[5:14] doesn't include other retirement
[5:16] accounts, and perhaps they have other
[5:18] savings or investments elsewhere to fall
[5:19] back on. So, it's not as apocalyptic as
[5:22] this might seem, but the overall results
[5:25] are pretty undeniable. Most Americans
[5:27] are coming up on retirement with way
[5:30] less than they'll actually need, and
[5:32] they're leaning on social security to
[5:33] hopefully bridge that gap. Now, second,
[5:35] there is another layer to the story
[5:37] which changes the results entirely, and
[5:39] that's the fact that unfortunately 40%
[5:42] of Americans have absolutely no
[5:44] retirement savings in any account
[5:46] whatsoever. That's why when you put all
[5:48] of this together, you could clearly see
[5:50] that most people are not saving anywhere
[5:52] near the amount that they should be. And
[5:54] a lot of people are expecting to fall
[5:56] back on social security, which may or
[5:58] may not be there by the time they
[6:00] actually expect to receive it. So, in
[6:01] terms of how you compare at every age by
[6:03] amount, how much you should be saving to
[6:06] catch up, and what you could do today to
[6:08] put yourself ahead, here's exactly what
[6:10] you came for. Although, before we go
[6:11] into that, this is exactly why it's so
[6:13] important to understand exactly where
[6:15] all of your money goes every month.
[6:17] Because for most people, you don't fall
[6:19] behind all at once. It happens slowly
[6:22] over time, like all the subscriptions
[6:24] you've forgotten about, the payments
[6:25] you're not shopping around for, and then
[6:27] at the end of the year, that could be
[6:29] the difference between having a whole
[6:30] bunch of extra money left over to invest
[6:33] and wondering where it all went. That's
[6:35] why I think budgeting is so important,
[6:37] not just for future retirement, but also
[6:40] everyday necessities. And one of my
[6:41] favorite ways to do this just so happens
[6:44] to be the sponsor of today's video, and
[6:46] that would be Rocket Money. For those
[6:47] unaware, Rocket Money is an all-in-one
[6:49] personal finance app that allows you to
[6:51] track your spending, manage
[6:52] subscriptions, create custom budgets,
[6:55] and see your finances in one place
[6:57] instead of having to jump around through
[6:59] different accounts. For me, the big
[7:00] value is that it gives you a clearer
[7:02] picture of exactly where your money is
[7:03] going. Like, I could track exactly what
[7:06] I spend, make sure everything gets paid,
[7:08] and audit my entire financial statement
[7:10] in one dashboard. On top of that, Rocket
[7:13] Money could also help track your
[7:14] subscriptions in one place. And with a
[7:16] couple of taps, you could cancel the
[7:18] ones you no longer want. This alone
[7:20] could save you a lot of time because
[7:21] most people don't realize how many
[7:23] active subscriptions they have until
[7:25] they see them in one dashboard. And the
[7:27] data backs this up. In fact, you could
[7:28] save up to $740 a year when you use all
[7:31] of the app's premium features. So, if
[7:33] you want a better way to manage your
[7:34] money, just head to rocketmoney.com/gram
[7:36] with the QR code also on the screen or
[7:39] the link down below and unlock even more
[7:41] features with premium. Again, just check
[7:43] out rocketmoney.com/gram
[7:46] with the link below, QR code on the
[7:47] screen. Thank you so much. And now,
[7:49] let's get back to the video. All right,
[7:50] so in terms of the average 401k balance
[7:52] by age, where you stand, and exactly
[7:55] what people are investing in, there's
[7:57] one more topic worth discussing first,
[7:59] and that would be the savings collapse.
[8:01] Believe it or not, according to the
[8:03] Federal Reserve, the median American
[8:05] household has about $8,000 in their
[8:07] checking and savings accounts combined.
[8:10] And it gets lower the younger you are.
[8:12] Like for those under the age of 35, that
[8:14] number drops to about 5,400. And for
[8:16] older people living alone, it's as low
[8:18] as 4,300. So between a median $8,000 in
[8:22] the bank, and 44,000 in retirement.
[8:24] That's basically the entire financial
[8:26] picture for the typical American. And
[8:28] that also means that most people are
[8:30] just one ER visit, one busted
[8:33] transmission, or one layoff away from
[8:35] going broke or drawing down from their
[8:37] retirement accounts that they've spent
[8:39] decades building. Oh, and speaking of
[8:41] that, this is the part of the Vanguard
[8:43] study that's most concerning. Hardship
[8:45] withdrawals, where people pull out of
[8:47] their 401k, eat the penalty just to pay
[8:50] for an emergency, hit a record 6% of
[8:52] participants this year. This is the
[8:54] sixth straight year that this has
[8:56] increased, and it's roughly triple what
[8:58] it was from before the pandemic. On top
[9:00] of that, about 13% of people now have
[9:02] outstanding loans against their 401k,
[9:05] meaning people are literally borrowing
[9:07] from their future selves just to pay for
[9:09] the present. Why is this happening?
[9:11] Well, here's the number that ties it all
[9:13] together. The US personal savings rate,
[9:15] which is how much money people have left
[9:17] over after all of their expenses, just
[9:19] fell to 2.6%, which is the lowest it's
[9:23] been since April of 2008, right before
[9:26] the Great Financial Crisis. Like, just
[9:27] for context here, the 30-year average is
[9:30] about 5.7%. So, we're less than half the
[9:33] average. And this amount has been
[9:35] dwindling every single month. like it
[9:37] was 4.3% in January, 3.6% in February,
[9:41] 3.2% in March, and now 2.6%. In addition
[9:44] to that, here's what most people are
[9:46] forgetting. The savings rate is
[9:48] collapsing at the same time that the
[9:50] stock market has increased 28% over the
[9:52] last year. It seems like a
[9:54] contradiction, but it's actually the
[9:55] clearest picture of a K-shaped economy,
[9:57] where those at the top are doing better
[9:59] than ever while those at the bottom are
[10:01] barely scraping by. In fact, the data
[10:03] shows that 31% of Americans are now
[10:06] considered upper middle class, an amount
[10:08] that's tripled since 1979. So for those
[10:11] at the very top, things have never been
[10:13] better. But for everyone else, they're
[10:14] getting squeezed by things like rent,
[10:17] groceries, insurance, and child care
[10:19] that have all outpaced incomes. So their
[10:21] spending has increased. Well, the
[10:23] savings rate declines. That's why when
[10:25] you blend these two together, the
[10:26] average actually seems pretty good. But
[10:28] when you look at the data points
[10:30] individually, you'll see that the vast
[10:32] majority of people are not doing as well
[10:34] as the headlines say they are. Also,
[10:36] here's the part that should make
[10:37] everyone pay attention. Historically,
[10:39] when the savings rate reaches an
[10:41] absolute low like this, the stock market
[10:43] tends to suffer in the years following.
[10:45] Now, I'm not saying that's a guarantee,
[10:47] but it's something at least worth
[10:48] considering. So, with the bad news out
[10:50] of the way, here's exactly how much you
[10:53] should be saving by every age and
[10:55] exactly where you rank. And in terms of
[10:57] that, we need to talk about the 401k
[11:00] breakdown. Thankfully, there is an
[11:02] ultimate cheat sheet for anyone
[11:04] wondering how much money you need. The
[11:06] golden standard is that by the age of
[11:08] 30, you have one times your salary
[11:10] saved. By 40, you want three times. By
[11:13] 50, you want six times. By 60, you want
[11:16] eight times. And by the time you retire
[11:18] at 67, you want about 10 times your
[11:20] annual salary saved across all of your
[11:22] retirement accounts. Now, if you want to
[11:24] be within the top 1% of every category,
[11:27] according to Yahoo Finance, at the age
[11:29] of 24, you'll need $150,000.
[11:32] From 25 to 34, you'll need $365,000.
[11:37] From 40 to 44, that increases to
[11:39] $1,234,000.
[11:42] From 55 to 59, that'll take 3.1 million.
[11:46] And it tops out at $4,574,000
[11:50] for those aged between 65 to 69. Now,
[11:52] look, if those numbers make you feel
[11:54] anxious, just remember that the median
[11:56] 45 to 54 year old has about $87,000
[12:00] saved against a benchmark of $450,000.
[12:03] So, if you're feeling behind, just know
[12:06] that you're not the exception. You're
[12:08] literally in the same boat as everybody
[12:10] else. But even if you're behind, that
[12:13] doesn't mean it's hopeless. So, here's
[12:14] exactly how you could catch up today.
[12:16] Number one, if you have a 401k match,
[12:19] always get your employer contribution. I
[12:21] know this might sound boring, but it's
[12:23] literally the most important part of
[12:24] this entire video. Just do it. Get the
[12:27] employer match because oftentimes it
[12:29] means a guaranteed return of anywhere
[12:31] between 50 to 100%. It's free money.
[12:35] Always take it no matter what. Always.
[12:38] Otherwise, it's just it's dumb not to.
[12:41] Number two, use auto escalation. In this
[12:44] case, those who set up a default 401k
[12:46] and autocontribute have way more money
[12:48] than those who don't. So use that to
[12:50] your advantage. You're also able to set
[12:52] up your 401k deposits to automatically
[12:55] increase 1% every year. You're barely
[12:58] going to feel it, but over time that
[13:00] could add up to tens of thousands of
[13:02] dollars. Number three, if you're over
[13:03] the age of 50, max out the ketchup
[13:06] contributions. In this case, the IRS
[13:08] lets you contribute $7,500 a year extra
[13:11] on top of your normal contributions. And
[13:13] when you do this consistently for 15
[13:15] years, you could add almost $200,000
[13:18] more to your retirement. Now, number
[13:20] four, this is something that almost no
[13:21] one thinks about, but you got to watch
[13:24] the fees. Like in this case, an index
[13:26] fund might charge you only 0.03%.
[13:29] But an actively managed fund could be as
[13:31] high as 0.75%
[13:33] or more. It sounds small, but over 30
[13:36] years that could compound to tens of
[13:38] thousands of dollars wasted. So pay
[13:40] attention to it. And then finally,
[13:42] number five, don't get discouraged if
[13:44] you're behind. Look, the reality is a
[13:46] lot of people are behind in these
[13:47] benchmarks, so you're in good company.
[13:50] But really, the worst thing you could do
[13:51] is see how far behind you are, feel
[13:54] hopeless, and then just do nothing.
[13:56] Remember, the people who win at this
[13:58] aren't the ones starting out with the
[13:59] most money. They're the ones who just
[14:01] started immediately and then kept it
[14:04] consistently going over time without
[14:06] panic selling. So, in terms of what all
[14:08] of this means for you, what I think
[14:10] about this, where the market's headed in
[14:12] the future, and if this data is trending
[14:14] downwards, here's what you came for.
[14:17] Overall, I got to say in general, the
[14:19] economy is getting a little bit better.
[14:21] More people are contributing to the
[14:23] retirement and market participation is
[14:25] increasing, but most people are still
[14:29] drastically underprepared and not saving
[14:31] anywhere as much as they need to. And
[14:33] that's something worth keeping in mind.
[14:35] Like my honest take is that the people
[14:36] who win at this are not the ones who are
[14:38] the smartest or making the most money or
[14:41] having the highest returns. They're
[14:43] simply the people who set up a process
[14:45] as soon as possible, automated
[14:47] everything, stayed consistent with it,
[14:50] and that's it. Now, unfortunately, in
[14:52] terms of where we go from here, I tend
[14:54] to think that the financial gap is only
[14:56] going to continue getting worse before
[14:58] it gets better. like the people who
[14:59] invest in own assets will continue doing
[15:01] well while everyone else is going to
[15:03] fall even further and further behind.
[15:05] That's why it's so important to be aware
[15:07] that this is going on and be on the
[15:09] right side of the chart. So, here's
[15:11] exactly what I would do. It starts with
[15:14] keeping as much money on the sidelines
[15:16] as possible. 3 to 6 months worth of
[15:18] expenses is most likely sufficient. Keep
[15:20] that in a high yield savings account so
[15:22] you're able to earn a little extra
[15:23] interest. Automate your savings. Always
[15:26] take the employer match. Look at how
[15:28] much fees you're paying when it comes to
[15:30] what you're investing in and then just
[15:32] keep doing it no matter what. I say all
[15:34] of this because the reality is you don't
[15:36] need to be rich to win at this. You
[15:38] don't have to time the market. You don't
[15:40] have to find the next big 100x
[15:43] opportunity. You just need to start with
[15:45] what you have as soon as possible. And
[15:48] then no matter what, hit the like button
[15:50] and subscribe if you haven't done that
[15:51] already. So with that said, thank you so
[15:53] much for watching. And also, if you want
[15:55] bonus content as well as member style
[15:57] financial audits where I break down your
[15:59] own personal finances, feel free to join
[16:02] as a channel member. And as a perk of
[16:04] that as well, I personally respond to
[16:06] each and every one of your comments. So,
[16:08] if that sounds good, feel free to join.
[16:10] Thank you so much and until next