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Comparing your bank balance to someone else's may be irresistible, especially as retirement starts to feel less theoretical. But the "average" could give you the wrong impression. A relatively small number of wealthy households pull that figure upward, making the typical family look richer than it is.
The median (the midpoint where half of households have more and half have less) is usually a more useful comparison. Knowing both numbers could help you assess your position without unnecessary panic or false reassurance. Here is what the latest Federal Reserve data shows and how you might use it to grow your wealth before retirement.
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The average amount
According to the Federal Reserve's latest Survey of Consumer Finances, families headed by someone between 55 and 64 had an average of around $72,500 in transaction accounts in 2022.
That is the latest available SCF, even though the Federal Reserve began collecting data for its next survey in 2025. It also covers an age bracket, not people who are exactly 55, so the figure is best viewed as a benchmark rather than a precise snapshot of every 55-year-old.
The median balance is much lower
The more revealing number is the median. Among families in the 55-to-64 age bracket with transaction accounts, the median balance was only $8,000. That is massively different from the mean.
The nearly $65,000 gap shows how strongly high-balance households influence the average. If your bank balance falls well below $72,500, that does not necessarily mean most of your peers have more cash.
Why the median provides a fairer comparison
Imagine five households have $2,000, $4,000, $7,900, $15,000, and $334,600 in the bank. Their average balance is $72,700, even though four of the five have less than one-fourth of that amount.
The median would be $7,900 because it is the middle balance. That number better represents the household standing in the center of the group, while the average reflect the impact of the unusually large account at the top.
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What the Federal Reserve counts as cash in the bank
The Fed calls these holdings "transaction accounts." According to its 2022 SCF report, the category includes:
- Checking accounts
- Savings accounts
- Money market accounts
- Call accounts
- Prepaid debit cards
The figures do not include stocks, bonds, home equity, or retirement accounts. Certificates of deposit are also listed separately in the Fed's data. In other words, $7,900 is a measure of relatively accessible account balances, not a complete picture of a household's wealth.
Cash and retirement savings are not the same thing
Someone could have $8,000 in the bank and several hundred thousand dollars invested for retirement. Another person might keep $75,000 in savings but have little in a 401(k) or IRA.
Among 55-to-64-year-old households that owned retirement accounts, the Fed reported a median balance of around $185,000 and an average of about $537,700. Retirement accounts include IRAs, Keogh accounts, 401(k)s, 403(b)s, and similar employer-sponsored accounts. Those balances are separate from the cash figures above.
Plenty of people in their 50s have little retirement savings
Falling below the median does not make someone an isolated failure. In the 2022 SCF, only 57% of households headed by someone between 55 and 64 held retirement accounts. That means 43% did not have money in the retirement-account category measured by the survey.
A separate AARP survey found that 20% of adults 50 and older had no retirement savings in 2024. These studies use different definitions and populations, but both reveal substantial savings gaps among older Americans.
Age 55 still leaves time to build momentum
At 55, you may have another decade or more before retiring. These years can be valuable because earnings are often relatively high, some child-related expenses may be declining, and retirement contributions still have time to benefit from potential investment growth.
The window is shorter than it was at 35, but it is not closed. Raising contributions now could also establish a lower-spending routine that makes the eventual transition into retirement easier.
Catch-up contributions could help close the gap
The 401(k) contribution limits for 2026 leave more room than they did last year. The standard employee contribution limit for most 401(k), 403(b), and governmental 457 plans is $24,500. Workers who are 50 or older can contribute an additional $8,000, bringing the potential total to $32,500, if their plan permits catch-up contributions.
The IRS also allows a higher $11,250 catch-up for eligible participants ages 60 through 63. That would permit employee contributions of up to $35,750 in 2026. These limits do not mean everyone is able to afford the maximum, but they create more room to accelerate saving.
Focus on your trajectory instead of one comparison
Your current balance is only one frame in a much longer financial picture. Someone with $10,000 in the bank, manageable debt, a pension, and rapidly increasing retirement contributions may be in a stronger position than someone with more cash but high expenses and no long-term plan.
Useful next moves could include:
- Contributing enough to receive the full employer match
- Sending part of each raise or bonus to retirement savings
- Front-loading contributions when cash flow allows
- Redirecting paid-off debt payments into investments
- Reviewing subscriptions, insurance, and empty-nest expenses
The average balance may satisfy your curiosity, but your direction matters more. Consistently widening the gap between what you earn and spend could make the remaining accumulation years far more productive.
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Bottom line
The average 55-year-old household has considerably more cash than the median household, but that comparison tells only part of the story. Your emergency expenses, debt, retirement accounts, and monthly spending all matter when deciding whether you're financially prepared.
Rather than chasing an inflated average, focus on improving your position from year to year. Building accessible savings while increasing retirement contributions could help you prepare yourself financially for retirement and avoid selling investments during an unexpected downturn.
FAQs
Can you take money out of a 401(k) at 55 without a penalty?
Sometimes. Under the rule of 55, if you leave your employer in or after the year you turn 55, you may take distributions from that employer's plan without the 10% early withdrawal penalty, though you would still owe income tax. It applies only to the plan tied to the job you left, and not to IRAs.
Do 401(k) catch-up contributions have to be Roth in 2026?
Catch-up contributions have to be Roth only for higher earners. Starting in 2026, workers 50 and older whose prior-year wages with their plan sponsor topped $150,000 must make catch-up contributions on a Roth basis. Everyone else can still contribute pre-tax if their plan allows it.
Does an employer match count toward the $24,500 contribution limit?
No, the $24,500 elective deferral limit for 2026 applies only to money you put in yourself. Employer contributions fall under a separate combined cap, which is $72,000 for 2026, or $80,000 if you are 50 or older. That means a match adds to your total savings without eating into your own contribution room.
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- Retire like the rich: 14 ways you could build wealth in your 50s.
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- Make these 7 savvy moves when you have $1,000 in the bank.
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