Some states are saving far less for retirement than others — here’s where 401(k) balances lag behind and what you can do to catch up.
The amount you have saved in your 401(k) often depends as much on where you live as on how much you earn. Local economic factors — such as wages, cost of living, and job opportunities — all shape how much residents can save for the future and their overall financial health.
Below are the 12 states with the lowest average 401(k) balances, along with insights into how income and poverty rates influence retirement readiness across the U.S.
The Average 401(k) Balance in the U.S.
According to Fidelity Investments’ Q2 2025 Retirement Analysis, the national average 401(k) balance in the U.S. is $137,800. This figure serves as a benchmark for comparing how each state stacks up.
Income disparities and cost-of-living differences mean that some Americans can contribute far more toward retirement than others. Let’s take a closer look at the states where balances fall furthest behind.
States With the Lowest Average 401(k) Balances
Mississippi
Average 401(k) balance: $20,000
Mississippi ranks last, with residents holding an average 401(k) balance of $20,200. The median household income is just $54,203 — well below the national median of $80,610. With an 18.0% poverty rate, one of the highest in the country, residents have limited capacity to set aside long-term savings.
Louisiana
Average 401(k) balance: $21,200
Louisiana comes in just above Mississippi, with a $21,200 average balance. The state’s median income is $58,229, and its 18.9% poverty rate makes saving difficult for many households still struggling with everyday expenses.
Kentucky (tied)
Average 401(k) balance: $30,000
Kentucky shares a $30,000 average balance with Alabama. Its median household income is $61,118, and the 16.4% poverty rate — higher than the national average — makes consistent retirement saving a challenge for many residents.
Missouri (tied)
Average 401(k) balance: $30,000
Missouri’s average 401(k) balance matches Kentucky’s, but the financial picture is slightly brighter. Residents enjoy a higher median income of $68,545 and a 12.0% poverty rate, just below the U.S. average.
West Virginia
Average 401(k) balance: $35,100
With a median income of $55,948 and a 16.7% poverty rate, West Virginia faces significant economic barriers to retirement saving. Limited job opportunities and lower wages contribute to one of the smallest average balances nationwide.
Arkansas
Average 401(k) balance: $36,990
Arkansas ranks seventh, with a $36,990 average balance. The median household income of $58,700 and a 15.7% poverty rate make it difficult for many families to prioritize retirement contributions over everyday expenses.
Idaho
Average 401(k) balance: $39,000
Idaho residents maintain an average balance of $39,000 — slightly below the national figure but ahead of many Southern states. The state’s median income of $74,942 and 10.1% poverty rate show relatively strong economic footing, though retirement contributions remain modest.
Oklahoma
Average 401(k) balance: $39,100
Oklahoma’s average balance slightly edges out Idaho’s. However, a median income of $62,138 and a 15.9% poverty rate highlight persistent financial strain among residents, limiting their ability to save aggressively for retirement.
Florida (tied)
Average 401(k) balance: $40,000
Florida ties with Tennessee and Texas. The state’s median income is $73,311, and its 12.3% poverty rate falls just below the national average. Retirees and service-sector employment contribute to wide income disparities within the state.
Tennessee (tied)
Average 401(k) balance: $40,000
Tennessee’s average balance matches Florida’s and Texas’s, but with a lower median income of $67,631 and a 14.0% poverty rate, residents may find it harder to contribute consistently to their retirement funds.
Texas (tied)
Average 401(k) balance: $40,000
Texas rounds out the list with a $40,000 average balance. Despite a relatively strong median income of $75,780, the state’s 13.7% poverty rate indicates that not all residents share equally in its economic growth.
IRS 2025 401(k) Contribution Limits
For the 2025 tax year, the IRS raised the 401(k) contribution limit to $23,500, up from $23,000 in 2024. Workers aged 50 and older can contribute an additional $7,500 in catch-up contributions, making it easier to close retirement gaps later in life.
How to Boost Your 401(k) Savings
Even if your state’s average balance is low, you can take practical steps to strengthen your financial future.
1. Take Advantage of Employer Matching
If your employer offers a match, contribute enough to receive the full benefit — it’s free money toward your retirement. Compound growth on matching funds can significantly accelerate your balance over time.
2. Live Below Your Means
Keeping your lifestyle modest compared to your income helps free up funds for saving. Downsizing expenses — such as housing or discretionary spending — can increase your contributions without requiring a higher salary.
3. Start a Side Hustle
Supplemental income from part-time work or freelancing can help you add more to your retirement accounts. Even allocating a portion of this income toward your 401(k) can make a meaningful difference long-term.
Bottom Line
Where you live influences your financial outcomes, but your personal habits matter most. Whether your state ranks near the top or bottom, consistent contributions and disciplined spending can help you grow your retirement savings.
With thoughtful planning, budgeting, and regular contributions, you can build a solid foundation for retirement — no matter where you call home.