Workers under 25 who were automatically enrolled in a 401k contributed at a rate of 10.3% in 2026, compared to 8% for those who signed up voluntarily. This is a gap that Humphrey Yang identifies as one of the most consequential structural differences in retirement saving today (0:43). The average 401k balance for that same under-25 cohort now stands at $7,259, up from $6,899 a year ago (0:28). A modest dollar gain, but one Yang frames as meaningful given how early compounding begins.
Balances by Age Group
Yang's 2026 edition of the annual 401k benchmarking breakdown covers average balances and contribution rates across age bands. The two figures confirmed in the source material are presented below alongside the contribution rate data.
| Age Group | Avg. 401k Balance | Avg. Contribution Rate |
|---|---|---|
| Under 25 | $7,259 | 10.3% (auto-enrolled) / 8% (voluntary) |
| 25–34 | $50,261 | - |
| 35–44 | - | 10.6%–12.3% |
The jump from $7,259 for those under 25 to $50,261 for the 25-to-34 bracket (3:50) reflects both additional years of contributions and, for many workers, a period of rising income. Yang has examined this age-band progression before: in his 2025 edition of the same annual breakdown, he noted that only 54% of workers under 25 participated in their employer's 401k at all, the lowest participation rate of any age group. The 2026 data suggests the automatic enrollment mechanism is doing measurable work to close that gap.
The Automation Argument
Yang's central recommendation for workers in the 25-to-34 range centers on removing the decision from the equation entirely. Automatic contribution increases, he argues, are more reliable than relying on annual self-discipline.
“If you can automate the increase, that's even better.”
The logic follows directly from the enrollment data: the 2.3-percentage-point contribution gap between auto-enrolled and voluntary participants under 25 is not primarily a knowledge gap. It is a friction gap. Workers who never had to opt-in contribute more, consistently, because the default does the work. Yang has returned to this automation theme across multiple pieces, in earlier coverage on building a paycheck routine, he called automating everything "the best financial decision that you can make".
For workers aged 35 to 44, Yang reports that average contribution rates ran between 10.6% and 12.3% in 2026 (5:32), flat from the prior year. The plateau is notable: this is the cohort with the highest earning potential of any pre-retirement group, yet the contribution rate did not move. Yang does not editorialize heavily on the stagnation, but the data sits alongside his broader argument, made when he examined how savings rate matters more than salary, that income growth without a rising savings rate produces less wealth than the numbers suggest.
Job Changes and the Cash-Out Risk
One of Yang's most direct warnings in this breakdown concerns what happens at the moment of a job transition. The instruction is unambiguous (5:08): do not cash out a 401k when changing employers. The tax penalties and lost compounding from an early withdrawal can permanently reduce a retirement balance in ways that are difficult to recover from, particularly for workers in their 20s and 30s where time is the primary asset.
“Do not cash out your 401k if you ever change jobs.”
The warning is particularly relevant for the under-25 and 25-to-34 cohorts, where job mobility is highest. A worker who cashes out a $7,259 balance at 24 to cover a gap between jobs does not just lose $7,259, they lose the compounded value of that money over four decades, plus the immediate tax hit and early withdrawal penalty. Yang has quantified similar opportunity costs before: in a prior piece on wealth killers for those under 40, he calculated that $500 a month not invested over five years could represent $750,000 to over a million dollars in lost retirement value by age 65.
- 1Confirm your employer offers automatic enrollment and opt-in if not already enrolled
- 2Set up automatic annual contribution rate increases if your plan allows it
- 3Target at least the employer match threshold before directing savings elsewhere
- 4If changing jobs, roll your 401k into an IRA or your new employer's plan, do not cash out
- 5Workers aged 35-44 should review whether their 10.6%-12.3% contribution rate is keeping pace with income growth
The year-over-year increase in the under-25 average, from $6,899 to $7,259, is small in dollar terms but tracks in the right direction. Whether that trend continues depends largely on how broadly automatic enrollment spreads, and whether employers pair it with automatic escalation features that raise contribution rates over time without requiring workers to act. The 35-to-44 contribution rate staying flat suggests that for workers past the early accumulation phase, the automation advantage may already be fading.
