401(k) vs Roth IRA — Vanguard, Fidelity, and Federal Reserve Data on Median Balances by Age
Vanguard's How America Saves report, Fidelity's Retirement Snapshot, and Federal Reserve Survey of Consumer Finances — what people actually have saved, by age and account type.
The 401(k) vs. Roth IRA question is presented as a binary choice in most financial press. The data from Vanguard, Fidelity, and the Federal Reserve tells a different story: the median American household uses both, and the optimal strategy depends on age, income, and employer benefits.
This article uses the four largest US retirement savings datasets to answer four questions: what people actually have saved, what tax-advantaged accounts they use, and where the household-by-household decision lever lies.
- Vanguard’s median 401(k) balance by age (the numbers that matter)
- FINRA’s priority framework: match → Roth IRA → 401(k) max
- IRS 2024 contribution limits and Roth income phase-outs
- Why 44% of eligible workers leave employer match on the table
The median balance by age
Vanguard’s How America Saves 2024 (5+ million participants) is the largest 401(k) dataset in the country. The median balance — the middle person, not the average — by age:
| Age range | Vanguard median 401(k) | Fidelity mean (for comparison) |
|---|---|---|
| Under 25 | $1,948 | $5,236 |
| 25-34 | $14,068 | $37,211 |
| 35-44 | $39,492 | $97,020 |
| 45-54 | $74,642 | $178,000 |
| 55-64 | $122,957 | $271,720 |
| 65+ | $99,985 | $232,000 |
The gap between median and mean is the inequality story: top earners pull the average up, but for the typical worker, retirement savings are dramatically lower than the headlines suggest.
Federal Reserve 2022 SCF: 47% of working-age households have $0 in retirement accounts. The numbers above are conditional on having any retirement savings.
The FINRA priority framework
FINRA’s 2024 guidance is clear and specific:
- Contribute to 401(k) up to the employer match — free money. BLS data: average match is 4.7% of salary. Skipping it is a 4.7% pay cut.
- Max out Roth IRA ($7,000 in 2024, $8,000 if 50+) — tax-free growth + flexibility for early withdrawal of contributions.
- Return to 401(k) up to the limit ($23,000 in 2024, $30,500 if 50+) — large pre-tax shelter.
- Above 401(k) limit — backdoor Roth conversions, brokerage account, taxable investments.
The order matters. The Roth IRA’s $7,000 cap is small but the tax-free growth and flexibility are uniquely valuable.
2024 IRS limits at a glance
$23,000 (under 50) / $30,500 (50+)
$7,000 (under 50) / $8,000 (50+)
$146,000 - $161,000
$230,000 - $240,000
Roth vs. Traditional — the actual decision
Standard advice frames this as “expected tax rate” — Roth if higher rate now, Traditional if lower. The real-world data adds nuance:
Choose Roth (after-tax now, tax-free in retirement) if:
- You’re under 35 — long compounding window favors tax-free growth.
- You expect higher income in retirement than now (rising career trajectory).
- You want flexibility — Roth contributions can be withdrawn anytime tax-free.
- You’ll likely face higher tax rates due to demographic pressure (TCJA expiration 2026, Medicare/SS funding).
Choose Traditional (pre-tax now, taxed in retirement) if:
- You’re in peak earning years (45-60) at a high marginal rate.
- You expect significantly lower retirement income than current.
- You need the immediate tax deduction to make ends meet.
Do both if — most households should diversify. Even 70% Roth / 30% Traditional reduces single-strategy risk. T. Rowe Price’s 2024 modeling shows mixed strategies outperform pure-Roth or pure-Traditional in most market scenarios.
The benchmark you should hit
T. Rowe Price’s salary-multiple benchmark is the most usable yardstick:
| Age | Target multiple of annual salary |
|---|---|
| 30 | 1× |
| 40 | 3× |
| 50 | 6× |
| 60 | 8× |
| 67 | 10× |
For a household earning $80,000, the 50 milestone is $480,000. Vanguard’s median 50-54 balance is $74,642 — meaning the typical household is dramatically behind benchmark. EBRI’s 2024 Retirement Confidence Survey: 49% of workers say they have insufficient savings.
The forgotten employer match
Vanguard 2024: 56% of eligible employees contribute enough to capture the full employer match. The other 44% are leaving an average of 4.7% of salary on the table — for an $80,000 earner, that’s $3,760/year forfeited.
This is the largest single high-impact action for the average worker. Before optimizing Roth-vs-Traditional, before debating asset allocation, contribute enough to 401(k) to capture every dollar of employer match. The decision is easier than the rest.
The bottom line
The data is clear:
- Median balances are below benchmarks — most households need to save more, not optimize complex tax decisions.
- Employer match unclaimed is the biggest leak. Capture it first.
- The Roth IRA $7,000 cap is small but uniquely valuable — flexibility + tax-free growth.
- Both accounts is normal — tax diversification beats single-strategy purity.
For most US workers in 2025: contribute enough to 401(k) for full match, then max Roth IRA, then return to 401(k). The order is consistent across FINRA, Vanguard, and Fidelity guidance.