Volatility marked the financial landscape over the past year, persistently shaking up retirement accounts as stock prices fluctuated dramatically before recovering. Despite these turbulent market conditions, many retirement savers demonstrated resilience, and a notable number emerged as millionaires. According to a recent report from Fidelity Investments, the average balance in 401(k) accounts increased by 11% year-over-year, reaching approximately $146,100. The number of investors boasting balances of $1 million or more in their accounts reached an unprecedented high.
Michael Shamrell, vice president of workplace thought leadership at Fidelity Investments, emphasized the importance of a long-term perspective in retirement planning. He highlighted that even in the face of market uncertainties and economic challenges throughout 2025, both employees and employers maintained consistent contributions to retirement savings, contributing to record-high savings levels.
For the third consecutive year, average annual account balances in 401(k) and 403(b) plans surged by double digits. Meanwhile, the average IRA balance rose by 7% compared to the previous year. The data reflects the robust performance of the U.S. market in 2025, with the S&P 500 rising by 16.9%, the Nasdaq Composite increasing by more than 20%, and the small-cap Russell 2000 showing a gain of around 13%.
Long-term savers who remained in their 401(k) plans with the same employer for five years experienced a striking 16% increase in their average balance from the end of 2024, largely due to steadfast saving habits. This cohort maintained an average savings rate of 14.2%, consistent with the previous year, which included an employee contribution average of 9.5% of gross income and an employer match of 4.7%. Additionally, nearly 40% of workers increased their 401(k) contribution rates during 2025, while only 10.6% reduced theirs.
In a positive trend for individual retirement accounts (IRAs), contributions rose by 25% year-over-year, with total contributions increasing by 23%, setting a record for the highest contributions made between late September and year-end. Most notably, Generation X—the oldest members of which are turning 61 this year—raised their contribution rates by 25%, reflecting an awareness of their impending retirement. The average savings rate for Gen X now stands at over 15%, surpassing figures for millennials and Gen Z.
Millennials and Gen Z workers are increasingly utilizing Roth 401(k)s and target date funds, respectively. The report notes that more than 13% of Gen Z participants in their 20s raised their contribution rates significantly during the last quarter of 2025.
The count of 401(k) millionaires soared to a historic 665,000 by the end of December, a significant increase from 512,000 seen in early 2025. The demographic breakdown shows that Generation X accounts for 60.3% of this group, while baby boomers constitute 34.6%, as many are now starting to withdraw funds for retirement. Millennials, previously trailing in these figures, now represent 4.1% of 401(k) millionaires, indicating a potential shift in retirement preparedness among younger generations.
Shamrell noted that while historically, the pool of 401(k) millionaires has been dominated by Gen X and boomers, the rising trend of millennials reaching this milestone is noteworthy as they progress further in their careers.
Investing consistently in employer-sponsored retirement plans or IRAs enables individuals to ride out market fluctuations, allowing their investments to average out over time. A majority of retirement savers at Fidelity—63%—opted to place all their savings in target date funds, which dynamically adjust the mix of stocks and bonds as the target date approaches, becoming more conservative over time. While stocks are crucial for growth during prosperous times, bond holdings offer stability, providing retirement savers with the assurance they need during market turbulence.
