12 states with the lowest average 401(k) balances: How do your savings compare?
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12 states with the lowest average 401(k) balances: How do your savings compare?
Melanie Lockert July 16, 2025 at 7:26 AM
States with the lowest average 401(k) balances (JGI/Jamie Grill via Getty Images)
Contributing money to an employer-sponsored 401(k) can help jump-start your savings for the future, providing employer matches and tax advantages to grow your money. But while the average 401(k) balance reported by Fidelity Investments is $127,100, retirement savings for many Americans across the U.S. are much lower — particularly if you live in one of a dozen states highlighted in a recent U.S. Census Bureau study.
Here are the 12 states with the lowest average 401(k) balances, including economic factors and challenges that come into play when saving for retirement and tips for contributing more to your own 401(k) for a secure and healthy financial future.
1. Mississippi
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Average 401(k) balance: $20,200
Mississippi takes the top spot with the lowest average 401(k) balance in the U.S. at $20,200. Residents in the Magnolia State have lower median household incomes, and poverty rates are among the highest in the nation, according to the most recent U.S. Census data. The median household income in Mississippi is $54,203, compared to the U.S. average of $80,610, while the poverty rate is 18.0%, compared to 12.5% for the U.S. overall.
2. Louisiana
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Average 401(k) balance: $21,200
The state of Louisiana has a slightly higher average 401(k) balance than Mississippi at $21,200. The $1,000 difference could be attributed to the slightly higher income in the state: The median household income in Louisiana is $58,229, about $4,000 higher than in Mississippi, according to the U.S. Census. However, it still falls short compared to the national average of $80,610. Like Mississippi, Louisiana's poverty rate falls among the highest in the U.S. at 18.9% (versus the U.S. average of 12.5%).
3 (tied). Alabama
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Average 401(k) balance: $30,000
Alabama's average 401(k) balance puts the state in third place — however, it's tied with two other states: Kentucky and Missouri. Alabama’s median household income stands at $62,212, and 15.6% of the state's population lives below the poverty line, reported by the U.S. Census. The higher income and lower poverty rate compared to Mississippi and Louisiana may be what allows Alabama residents to save a bit more for retirement.
4 (tied). Kentucky
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Average 401(k) balance: $30,000
Like Alabama, Kentucky’s average 401(k) balance is $30,000. According to Census data, the median household income in Kentucky is $61,118, just under Alabama's household income. Kentucky has a slightly higher poverty rate than Alabama, at 16.4%, which means its residents may face more significant economic challenges than those in Alabama and Missouri tied for this balance.
5 (tied). Missouri
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Average 401(k) balance: $30,000
Tied with Alabama and Kentucky, Missouri’s average 401(k) balance is also $30,000. However, residents in Missouri make considerably more, with a median household income of $68,545, according to Census data. There’s a significant drop in the poverty rate as well compared with states tied for this balance, clocking in at 12.0% — which is half a percentage point lower than the national average.
6. West Virginia
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Average 401(k) balance: $35,100
Those who live in West Virginia have saved an average 401(k) balance of $35,100, despite the state's fewer resources and higher rates of poverty than others on our list. The median household income in the Mountain State is $55,948, which is much closer to the average income of Mississippi — the state on our list with the lowest 401(k) balance. Additionally, the state has a 16.7% poverty rate, according to U.S. Census data — among the top five highest rates in the U.S.
7. Arkansas
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Average 401(k) balance: $36,990
In the seventh spot is Arkansas, with an average 401(k) balance of $36,990. Interestingly, Arkansas's average income isn't as high as other states on our list: The median household income in Arkansas is $58,700, according to Census data, with a 15.7% poverty rate that, while higher than the 12.5% national average, is in line with neighboring states.
8. Idaho
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Average 401(k) balance: $39,000
Idaho has an average 401(k) balance of $39,000, which is a jump from Mississippi’s low $20,200. This makes sense when looking at how much higher the income is in the state. In Idaho, the median household income is $74,942, according to Census data — much closer to the national average of $80,610. Some 10.1% of the Gem State's population live below the poverty line, which is lower than the national average of 12.5%
9. Oklahoma
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Average 401(k) balance: $39,100
Oklahoma’s average 401(k) balance stands at $39,100, a nominal increase from Idaho’s $39,000 despite its residents having a lower average income. The median household income in Oklahoma is $62,138, according to U.S. Census data, and the poverty rate is among the highest in the country at 15.9%, compared to the U.S. average of 12.5%.
10 (tied). Florida
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Average 401(k) balance: $40,000
Rounding out the top 10 are three states with a tie. The average 401(k) balance in Florida, along with Tennessee and Texas, is $40,000. Florida trails just behind Texas when it comes to median household income at $73,311, compared with $75,780 in the Lone Star State.
Out of the three tied states, Florida is the only one with a poverty rate that's below the national average: 12.3% of its population lives below the poverty line, according to U.S. Census data, compared to 12.5% in the U.S. overall.
11 (tied). Tennessee
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Average 401(k) balance: $40,000
Despite having the same average 401(k) balance, Tennessee's median household income is lower than Texas's: $67,631 compared to $75,780. The poverty rate in the Volunteer State is 14.0%, according to U.S. Census data, more than a percentage point higher than the 12.5% national average.
12 (tied). Texas
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Average 401(k) balance: $40,000
Texas has the highest median household income of states on our list at $75,780, yet the same average 401(k) balance as Florida and Tennessee — two states tied with the Lone Star State for average 401(k) balance at $40,000. Despite a higher median income, 13.7% of the population in Texas lives in poverty, according to the U.S. Census, which is higher than the national average of 12.5%.
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What factors affect your ability to contribute to a 401(k)?
When looking at the lowest average 401(k) balances by state, it’s key to look at the big picture.
“The state-specific items that may impact a saver’s ability to invest in a 401(k) include cost of living, specifically housing costs, average wages or income being below average and/or limited availability to employers offering 401(k) plans,” says Jason Fannon, a certified financial planner and senior partner of Cornerstone Financial Services in Southfield, Mich.
Aside from financial factors, there’s also accessibility. Not every employer offers a 401(k) or similar retirement plan, and not every employee is eligible. As of 2022, a little more than half (54.4%) of Americans had a retirement account, according to a Federal Reserve survey.
“Another reason Americans may still struggle with saving in a 401(k) could be due to their employer not offering a 401(k) plan,” says Fannon. “The saver is then forced to establish an IRA, which they might not be familiar with. It’s important to note that many Americans still don’t understand retirement savings plans, like a 401(k).”
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401(k) contribution limits
An employer-sponsored 401(k) is an appealing retirement savings option, offering tax benefits and the ability to put away more for the future. You fund a 401(k) with pre-tax funds, reducing your taxable income and potentially resulting in a lower tax bill.
Additionally, in 2025 you can contribute up to $23,500, which is more than three times the amount you can put into a traditional IRA or Roth IRA. The 401(k) contribution limits increase over time, thanks to cost-of-living adjustments, rising from $23,000 in 2024.
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How to save more in your 401(k)
If you have access to a 401(k), contributing can help you build a solid nest egg for the future and increase your financial wellness. To save more in your 401(k), start by reviewing your income and expenses.
“My advice for those looking to boost their retirement savings is to first create a monthly budget. Determining how you can remove excess monthly costs can help free up some income, which can then be put toward a 401(k) contribution. Reviewing home/auto insurance, unused monthly subscriptions, etc., can help trim how much money is being spent each month,” says Fannon.
To maximize your 401(k) contributions:
Reduce your expenses. Lowering your overall expenses can provide more funds to put in your 401(k). Look to popular budgeting strategies to find the best fit with your lifestyle, spending and income.
Take advantage of pay increases. If you get a raise, consider adding all or a portion of those additional funds to your 401(k).
Increase contributions by 1%. The goal is to save more in your 401(k), ideally to the maximum contribution limit per year. If you can’t do that and feel overwhelmed, start slowly and increase contributions by 1%, re-evaluating your budget every quarter.
Get your employer match. If applicable, ensure you’re getting your employer 401(k) match. While people often say this is “free money,” it’s actually part of your total compensation package, and so you should take advantage of it.
Review your investments and potential fees. Evaluate your investment options and review the potential fees associated with them. These can be administrative fees, investment fees or individual service fees.
Don’t touch your savings. It can be tempting to take out a 401(k) withdrawal before retirement. But you don’t want to deal with potential consequences and miss out on valuable compound interest.
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About the U.S. Census SIPP survey data
The U.S. Census Bureau released data from the 2023 Survey of Income and Program Participation (SIPP) in July 2024. According to the U.S. Census, SIPP is a “longitudinal survey that provides comprehensive information about income and assistance program participation of individuals and households in the United States.”
The survey uses 2022 data and shows a snapshot of Americans’ financial well-being, including assets and debt. One of the data points shared is the median value of retirement accounts, including 401(k) and Thrift Savings Plans, which are similar to 401(k)s but for employees of the U.S. government.
More stories in our retirement planning and money series -
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FAQs: Planning for retirement and protecting your wealth
Learn more about growing your money and planning for the post–9 to 5 with these common questions.
Is my retirement safe from bankruptcy?
In most cases, retirement funds, pensions and even Social Security benefits are safe from being taken from creditors to repay your outstanding debt, but it depends on the accounts in question and how much you have in those accounts. Talk with a reputable attorney for legal advice or trusted retirement professional for guidance to determine whether bankruptcy is the right option for you. Learn about protecting your savings, investments and more in our comprehensive guide to bankruptcy in retirement.
What’s the difference between saving and investing?
The core difference between saving and investing lies in the accessibility of your money and the risks you take with it. Saving means keeping your money in secure accounts with little to no risk of losing your principal. On the other hand, investing involves buying assets like stocks, bonds or mutual funds that can potentially earn higher returns. Learn more in our guide to saving and investing to find the best approach for your money and financial goals.
I have $50,000 to invest. What are the best ways to grow this money?
There’s no one “right” way to invest or grow $50,000, especially if you’re in or near retirement. Your best options will depend on your financial circumstances, budget and long-term goals — starting with paying down high-interest debt and maxing out your retirement funds. See expert recommendations for your newfound nest egg in our guide to investing and growing $50,000.
Is it worth paying for a financial advisor to plan for retirement?
Yes, for most people. A financial advisor can help you manage your money as you plan for retirement, while giving you a sense of how much you can spend during retirement to make your savings last. Their financial advice and market expertise may also help maximize your savings. If you’re anxious about retirement, working with an advisor can also give you peace of mind by assuring you that you’re on the right path. Start with our guide to finding a trusted retirement advisor.
Sources -
Q1 2025 Retirement Analysis, Fidelity Investments. Accessed July 15, 2025.
2023 Survey of Income and Program Participation, United States Census Bureau. Accessed July 15, 2025.
Survey of Consumer Finances (SCF), Federal Reserve. Accessed July 15, 2025.
About the writer
Melanie Lockert is an L.A.-born and Brooklyn-based freelance writer with a decade of experience in personal finance. Melanie started the Dear Debt blog in 2013 and chronicled her journey out of $81,000 in student loan debt. She published a book of the same name in 2016. Her personal finance expertise has been featured on Fortune Recommends, CNN Underscored, Yahoo Finance and Business Insider, among other publications. She is also the host of the Mental Health and Wealth Show and cofounder of the Lola Retreat, a finance event for women.
Article edited by Kelly Suzan Waggoner
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