Is the Median or the Average a Better Number to Look at for Retirement Savings?
You saw one article claiming the “average” retirement balance for your age group is well over six figures, and then another citing a much lower number for the same age group, and now you’re wondering which one is lying to you. Neither is, technically. They’re just measuring different things.
The short answer
The median is generally the more representative number for retirement savings data, because a relatively small number of people with very large balances can pull the average far above what a typical person actually has saved. The average isn’t wrong, but it’s easily distorted, while the median shows the midpoint value where half of people have more and half have less.
Why averages get skewed so easily
An average is calculated by adding up every value and dividing by the number of people. That math treats a $50,000 balance and a $5,000,000 balance as equally weighted contributions to the total, which sounds fine until you realize how few people it takes to drag the number upward.
- Retirement savings are heavily concentrated at the top. A relatively small share of savers, often those who started early, had high incomes, or benefited from strong market growth over decades, hold a disproportionate share of total retirement assets.
- One outlier can shift the whole picture. In a group of ten people where nine have $40,000 saved and one has $2,000,000, the average is over $236,000, a figure that doesn’t describe anyone in the group accurately.
- Averages are still useful for other purposes. They’re better suited to measuring totals across a population, like aggregate savings nationally, than to describing what an individual person should expect to see when comparing themselves to peers.
What the median actually tells you
The median is the middle value when every data point is lined up in order. Half the group falls above it, half below. In the example above, the median of that same group is $40,000, a number that actually reflects what most people in the group have.
- It resists distortion from extreme values. A handful of very high or very low balances barely move the median at all.
- It better represents a “typical” person. If you’re trying to compare your own situation to a broader group, the median generally gives a fairer benchmark than the average.
- It still has limitations. The median doesn’t show the full range or how spread out the data is, so a very low median in one age bracket versus a slightly higher one in the next doesn’t fully capture how volatile that transition can be.
Why this distinction matters for retirement specifically
Retirement savings data is a textbook example of a skewed distribution. Some people have access to a workplace plan with a strong match for decades, some started saving late, and some work for years with no retirement benefits at all. Because the range between “no savings” and “substantial savings” is so wide, the average consistently overstates what a typical person has put away, sometimes by a significant margin.
A quick way to check which number you’re looking at
When a statistic is presented without labeling whether it’s a mean or median, it’s worth treating it cautiously, especially with financial figures. A useful habit is to look for both numbers side by side. If the average is dramatically higher than the median, that gap itself is informative, since it signals just how concentrated the underlying data is.
This same median-versus-average distinction shows up in related retirement questions too, such as whether retirement savings vary a lot by region, where regional averages can be similarly skewed by a small number of high earners.
Final thoughts
Neither statistic is inherently more truthful, but for understanding what a typical retirement balance looks like, the median generally gives a clearer, less distorted picture than the average. Knowing which one a headline or chart is actually citing, and asking for the other if it’s missing, is a simple way to read financial statistics more critically.