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 $125,900, 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.

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 $77,719, while the poverty rate is 18.0%, compared to 12.5% for the U.S. overall.

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 $77,719. Like Mississippi, Louisiana's poverty rate falls among the highest in the U.S.: 18.9% versus the U.S. average of 12.5%.

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.

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.

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.

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.

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.

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 $77,719. Some 10.1% of the Gem State's population live below the poverty line, which is lower than the national average of 12.5%

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%.

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.

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.

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%.

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).”

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 2024 you can contribute up to $23,000, 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.

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.

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.

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.

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.