WTF Just Happened To Your Retirement Accounts?!

[00:00] A record number of Americans are now

[00:01] carrying credit card debt that they

[00:03] can't pay down. More Americans are

[00:05] tapping into their 401ks for

[00:08] emergencies. Costs are high. Americans

[00:10] are struggling. Inflation is outpacing

[00:13] folks paychecks.

[00:14] >> A family of four now needs nearly

[00:16] $140,000 a year just to survive.

[00:19] >> Well, what if people just don't pay it?

[00:22] >> What's up, guys? It's Graeme here. So,

[00:23] I'm going to show you exactly how much

[00:25] money everyone else has in 2026 and then

[00:28] exactly where you rank. Because once you

[00:31] see the actual numbers, you'll realize

[00:33] that a lot of people are quietly falling

[00:35] behind and they don't even know it yet.

[00:38] Like, to put this into perspective,

[00:39] Vanguard just released a brand new

[00:42] report that tracks the retirement

[00:43] accounts of nearly 5 million people. And

[00:46] on the surface, the average person now

[00:47] has $167,000

[00:50] stashed away in retirement. Except that

[00:52] number is basically a lie because the

[00:54] typical American, the person right in

[00:56] the center, has just $44,000. And worst

[00:59] of all, one in four people have less

[01:02] than $10,000. Well, one in 10 have zero

[01:05] or negative net worth to their entire

[01:07] name. That's why we really got to break

[01:09] down how much money people actually

[01:10] have. The one secret that's quietly

[01:13] turning everyday people into

[01:14] multi-millionaires, and then most

[01:16] importantly, what you could do about

[01:18] this starting today to come out ahead.

[01:21] Because if this trend continues, the

[01:23] next crisis won't be people losing money

[01:25] in the stock market. It'll be people in

[01:27] their 20s and 30s realizing that they

[01:29] can't afford a house, they can't afford

[01:31] kids, they can't afford an emergency,

[01:33] and somehow they still can't afford to

[01:36] stop working. Although, before we start,

[01:38] as usual, if you appreciate the

[01:39] breakdowns like this, it would mean the

[01:41] world to me if you hit the like button

[01:43] and subscribed if you haven't done it

[01:44] already. Yes, I know it's the millionth

[01:46] time I've asked, but it does help

[01:48] tremendously and is a huge thank you for

[01:50] doing that. Here's a picture of Karen.

[01:52] So, thanks so much and also big thank

[01:53] you to Rocket Money for sponsoring this

[01:54] video. But more on that later. All

[01:56] right, so before we talk about how much

[01:58] the typical American has saved, why

[02:00] people are falling behind, and then what

[02:02] you could do about it, we need to talk

[02:04] about the savings crisis. For those

[02:06] unaware, every year, Vanguard analyzes

[02:08] the real accounts of 5 million Americans

[02:11] to put together what is basically a

[02:13] financial X-ray of the entire country.

[02:16] With this, we're able to see exactly how

[02:17] much money people are putting away for

[02:19] retirement, exactly where they're

[02:21] investing, and what they do when the

[02:23] market goes crazy. And when it comes to

[02:25] that, the 2026 report is pretty

[02:28] shocking. Why? Well, as it turns out, we

[02:30] have some really good news and some

[02:32] really bad news. We'll start with the

[02:33] good news first. Believe it or not,

[02:35] Vanguard says we have what's called a

[02:37] retirement revolution because 25 years

[02:40] ago, only 65% of workers bothered to

[02:42] participate in their 401k. But today,

[02:44] that number just hit a record 86%. On

[02:47] top of that, the savings rate of those

[02:49] people has just hit an all-time high of

[02:52] 12.1%.

[02:53] Again, on paper, this is really great.

[02:56] But in terms of the bad news, this is

[02:58] what the headline misses. Even though

[03:00] the average person has a 401k balance of

[03:02] $167,000,

[03:05] in reality, the average takes everyone's

[03:07] balances, adds them up, and then divides

[03:10] by that number of people, which means

[03:12] those results are skewed by a small

[03:14] number of multi multi-millionaires.

[03:16] Like, if I'm in a room with Elon Musk,

[03:19] our average net worth is closer to $550

[03:22] million, even though me personally, I'm

[03:25] closer to zero than I am 550 million.

[03:28] That's why to get an accurate

[03:29] understanding of these numbers, it's a

[03:31] lot more important to look at what's

[03:32] called the median, the person standing

[03:35] right in the middle. And in this report,

[03:37] the median person had less than a third

[03:39] of the average at just $44,000.

[03:42] So the next time you see a headline

[03:44] celebrating that Americans have record

[03:46] 401k balances, they're really describing

[03:48] a very wealthy group at the top and

[03:51] conveniently leaving out everybody else.

[03:53] So, in terms of just how big this gap is

[03:55] growing and why some people are making

[03:57] so much more money than others, we need

[03:59] to talk about exactly where people are

[04:01] investing. And to do that, this brings

[04:03] me to the breakdown by age. Now, here's

[04:06] where things get really interesting. In

[04:08] terms of where people are investing,

[04:10] despite what you might see, most people

[04:13] are not buying IPOs, meme stocks, and

[04:15] cryptocurrency with their retirement.

[04:17] Instead, roughly 70% of people are in

[04:20] what's called a professionally managed

[04:22] allocation, and about 61% of people are

[04:25] in a single target date index fund with

[04:27] nearly two out of every $3 being

[04:29] invested in this way. However, here's

[04:31] where things get pretty disappointing.

[04:33] Because when you break down the balance

[04:34] by age, the gap between the median and

[04:37] average becomes way too big to ignore.

[04:40] Like first, for people aged 55 to 64,

[04:43] the median 401k balance is only around

[04:46] $95,000, which might seem like a lot

[04:49] until you consider that a 4% withdrawal

[04:51] rate, which is considered the safe

[04:53] amount that you'd be able to spend in

[04:55] retirement without running out of money,

[04:56] only gives you $3,800 a year in

[04:59] spending, or $317

[05:02] a month to spend in retirement after

[05:06] working for 40 years. Of course, in

[05:08] fairness, these numbers could be low

[05:10] because some Americans are already

[05:12] drawing down from their 401k. This

[05:14] doesn't include other retirement

[05:16] accounts, and perhaps they have other

[05:18] savings or investments elsewhere to fall

[05:19] back on. So, it's not as apocalyptic as

[05:22] this might seem, but the overall results

[05:25] are pretty undeniable. Most Americans

[05:27] are coming up on retirement with way

[05:30] less than they'll actually need, and

[05:32] they're leaning on social security to

[05:33] hopefully bridge that gap. Now, second,

[05:35] there is another layer to the story

[05:37] which changes the results entirely, and

[05:39] that's the fact that unfortunately 40%

[05:42] of Americans have absolutely no

[05:44] retirement savings in any account

[05:46] whatsoever. That's why when you put all

[05:48] of this together, you could clearly see

[05:50] that most people are not saving anywhere

[05:52] near the amount that they should be. And

[05:54] a lot of people are expecting to fall

[05:56] back on social security, which may or

[05:58] may not be there by the time they

[06:00] actually expect to receive it. So, in

[06:01] terms of how you compare at every age by

[06:03] amount, how much you should be saving to

[06:06] catch up, and what you could do today to

[06:08] put yourself ahead, here's exactly what

[06:10] you came for. Although, before we go

[06:11] into that, this is exactly why it's so

[06:13] important to understand exactly where

[06:15] all of your money goes every month.

[06:17] Because for most people, you don't fall

[06:19] behind all at once. It happens slowly

[06:22] over time, like all the subscriptions

[06:24] you've forgotten about, the payments

[06:25] you're not shopping around for, and then

[06:27] at the end of the year, that could be

[06:29] the difference between having a whole

[06:30] bunch of extra money left over to invest

[06:33] and wondering where it all went. That's

[06:35] why I think budgeting is so important,

[06:37] not just for future retirement, but also

[06:40] everyday necessities. And one of my

[06:41] favorite ways to do this just so happens

[06:44] to be the sponsor of today's video, and

[06:46] that would be Rocket Money. For those

[06:47] unaware, Rocket Money is an all-in-one

[06:49] personal finance app that allows you to

[06:51] track your spending, manage

[06:52] subscriptions, create custom budgets,

[06:55] and see your finances in one place

[06:57] instead of having to jump around through

[06:59] different accounts. For me, the big

[07:00] value is that it gives you a clearer

[07:02] picture of exactly where your money is

[07:03] going. Like, I could track exactly what

[07:06] I spend, make sure everything gets paid,

[07:08] and audit my entire financial statement

[07:10] in one dashboard. On top of that, Rocket

[07:13] Money could also help track your

[07:14] subscriptions in one place. And with a

[07:16] couple of taps, you could cancel the

[07:18] ones you no longer want. This alone

[07:20] could save you a lot of time because

[07:21] most people don't realize how many

[07:23] active subscriptions they have until

[07:25] they see them in one dashboard. And the

[07:27] data backs this up. In fact, you could

[07:28] save up to $740 a year when you use all

[07:31] of the app's premium features. So, if

[07:33] you want a better way to manage your

[07:34] money, just head to rocketmoney.com/gram

[07:36] with the QR code also on the screen or

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[07:41] features with premium. Again, just check

[07:43] out rocketmoney.com/gram

[07:46] with the link below, QR code on the

[07:47] screen. Thank you so much. And now,

[07:49] let's get back to the video. All right,

[07:50] so in terms of the average 401k balance

[07:52] by age, where you stand, and exactly

[07:55] what people are investing in, there's

[07:57] one more topic worth discussing first,

[07:59] and that would be the savings collapse.

[08:01] Believe it or not, according to the

[08:03] Federal Reserve, the median American

[08:05] household has about $8,000 in their

[08:07] checking and savings accounts combined.

[08:10] And it gets lower the younger you are.

[08:12] Like for those under the age of 35, that

[08:14] number drops to about 5,400. And for

[08:16] older people living alone, it's as low

[08:18] as 4,300. So between a median $8,000 in

[08:22] the bank, and 44,000 in retirement.

[08:24] That's basically the entire financial

[08:26] picture for the typical American. And

[08:28] that also means that most people are

[08:30] just one ER visit, one busted

[08:33] transmission, or one layoff away from

[08:35] going broke or drawing down from their

[08:37] retirement accounts that they've spent

[08:39] decades building. Oh, and speaking of

[08:41] that, this is the part of the Vanguard

[08:43] study that's most concerning. Hardship

[08:45] withdrawals, where people pull out of

[08:47] their 401k, eat the penalty just to pay

[08:50] for an emergency, hit a record 6% of

[08:52] participants this year. This is the

[08:54] sixth straight year that this has

[08:56] increased, and it's roughly triple what

[08:58] it was from before the pandemic. On top

[09:00] of that, about 13% of people now have

[09:02] outstanding loans against their 401k,

[09:05] meaning people are literally borrowing

[09:07] from their future selves just to pay for

[09:09] the present. Why is this happening?

[09:11] Well, here's the number that ties it all

[09:13] together. The US personal savings rate,

[09:15] which is how much money people have left

[09:17] over after all of their expenses, just

[09:19] fell to 2.6%, which is the lowest it's

[09:23] been since April of 2008, right before

[09:26] the Great Financial Crisis. Like, just

[09:27] for context here, the 30-year average is

[09:30] about 5.7%. So, we're less than half the

[09:33] average. And this amount has been

[09:35] dwindling every single month. like it

[09:37] was 4.3% in January, 3.6% in February,

[09:41] 3.2% in March, and now 2.6%. In addition

[09:44] to that, here's what most people are

[09:46] forgetting. The savings rate is

[09:48] collapsing at the same time that the

[09:50] stock market has increased 28% over the

[09:52] last year. It seems like a

[09:54] contradiction, but it's actually the

[09:55] clearest picture of a K-shaped economy,

[09:57] where those at the top are doing better

[09:59] 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