Market gains lifted accounts despite repeated swings
Retirement savers ended 2025 with larger balances even after a year marked by sharp market pullbacks and rapid rebounds. The average 401(k) balance rose 11% to $146,100 by year-end, according to a new report from Fidelity Investments, and the number of people with at least $1 million in workplace retirement plans reached a new high.
Fidelity said the improvement in balances reflected both stronger market performance and steady contributions. The firm pointed to a consistent approach by workers and employers even as volatility returned repeatedly. Michael Shamrell, Fidelity’s vice president of workplace thought leadership, said a long-term mindset helped prevent savers from making reactive shifts during short-term turbulence.
Fidelity’s report covered thousands of defined contribution plans across U.S. companies and nonprofits, representing more than 40 million participants, alongside 18.9 million IRA accounts. The firm said average annual balances in both 401(k) and 403(b) plans rose by double digits for the third straight year, while the average IRA balance increased 7%.
Contribution behavior stayed firm, with more workers raising rates
For long-term participants who remained in the same employer plan for five years, Fidelity reported the average 401(k) balance climbed 16% from year-end 2024. The firm attributed much of that progress to contribution discipline rather than trading activity.
Among that cohort, the average savings rate held at 14.2%, similar to 2024. That figure included an average employee contribution of 9.5% of gross income and an average employer match of 4.7%.
Fidelity said behavior skewed toward higher saving, with nearly 40% of workers increasing their contribution rate at some point during 2025, compared with 10.6% who reduced it. The report also showed IRA funding accelerated, with IRA contributions up 25% from the prior year and total contributions up 23%, a record for the period between the end of September and year-end.
Gen X boosts savings as retirement horizon moves closer
One of the most notable shifts came from Gen X, which Fidelity said raised contributions 25% year over year. The firm noted that the oldest Gen X workers are nearing traditional retirement ages, and that stage of life coincides with higher earnings capacity.
Fidelity reported the average Gen X savings rate now exceeds 15%, compared with 13.5% for millennials and 11.3% for Gen Z. Shamrell said Gen X is increasingly aware it is moving into the retirement transition years and may be able to contribute more, including through catch-up contributions for those who qualify.
The report also pointed to evolving allocation choices among younger workers. Millennials and Gen Z are putting a larger share of savings into Roth 401(k) options, while Gen Z continues to lean heavily on target date funds. Fidelity said more than 13% of Gen Z participants in their 20s increased their contribution rate from the end of September to the end of December.
401(k) millionaires hit a record as diversification remains common
Fidelity said the count of 401(k) millionaires reached 665,000 at the end of December, up from 512,000 in the first quarter. Gen X represented the largest share of that group at 60.3%, followed by boomers at 34.6% and millennials at 4.1%.
Fidelity said the pattern reflects career stage, with Gen X and boomers historically dominating millionaire totals. The firm noted that millennials are beginning to reach the milestone as they move further into their careers, a shift the company described as a developing change in the data.
The report also highlighted how automated investing can dampen the impulse to time markets. Regular contributions mean savers are buying during rallies and pullbacks, smoothing results over time. Fidelity said target date funds remain a major stabilizer, with 63% of its savers holding all of their 401(k) assets in a target date fund.
Fidelity also reported that all-equity portfolios are relatively rare on its platform. Fewer than 7% of savers held a 100% equity allocation, reflecting the role that fixed income plays in cushioning volatility when economic news or market shocks hit risk assets.
