Retirement Contributions Hit All-Time High, Fidelity Says

Americans are taking a page from the FIRE movement’s playbook.

Fidelity’s retirement analysis from Q1 2025 showed that more US workers may be able to achieve the group’s dual goals of financial independence and retiring early. Although IRA, 401(k), and 403(b) balances were lower due to this spring’s stock market swings, contribution rates increased. The report found that the combined 403(b) savings rate for employees and employers held steady at 11.8%, while the 401(k) savings rate grew to 14.3% — the highest figure ever recorded by the asset manager. IRA contributions rose 4.5% from last year.

The findings, based on analysis of 50 million retirement accounts, have implications for how advisors should think about their clients’ retirement plans. “More people are putting more money away, which is great, but I think a lot of them are putting it in the wrong place, in a 401(k) rather than a Roth,” said CPA and retirement expert Ed Slott. While 401(k)s allow workers to contribute pre-tax income, the funds are subject to taxation when withdrawn; Roth funds are taxed beforehand. Savers who contribute to a 401(k) “are building up a future tax bill in retirement,” he said.

Down for the Count

The stock market volatility of last quarter dragged retirement account balances down 3% overall, Fidelity found. That impacts both retirees and Gen Zers, many of whom are just starting their careers and might take out their money too early to pay for expenses like down payments on homes or to embark on “mini-retirements.” “[Young people] get married, they want to buy a home, and all of a sudden they don’t have enough money,” Slott said, “so they either stop their 401(k) contributions, or, even worse, take some of that money out.”

Still, both older and younger generations are saving more than in the past, which is a sign of faith in the markets, said Mike Shamrell, Fidelity’s VP of Workplace Thought Leadership. This might be because Gen Z has more access to financial education resources via social media, while Gen Xers, who are further along in their careers and closer to retirement, “have seen this movie before” in previous recessions, he said.

On top of that, account averages generally held steady year-over-year:

• IRA accounts held an average of $121,983, down 4% from last quarter and down 1% year-over-year.
• 401(k)s had an average of $127,100, down 3% from last quarter and up 1% year-over-year.
• 403(b)s had an average of $115,424, down 2% from last quarter and up 2% year-over-year.

A Happy Medium? Slott thinks advisors need to help their clients strike a careful balance between saving and spending. “For a while we had that FIRE movement, [where] you live in a cave for 10 years and then you’ll have a lot of money,” he said. “I equate that with losing weight, going on a diet. If you deprive yourself of everything, one day, you’re just going to eat the refrigerator.”