Decline in Retirement Account Balances
Retirement account balances experienced a dip in the first quarter of 2025, influenced by stock market turbulence. Despite this, individuals continued to contribute steadily to their retirement savings, as indicated by new data from Fidelity Investments.
The financial services firm examined over 50 million retirement accounts, revealing small declines in the average balances of 401(k), IRA, and 403(b) accounts over the first three months of the year.
Specific Balance Figures
The average 401(k) account balance decreased by 3% from the previous quarter, reaching $127,100, according to Fidelity's Q1 2025 retirement analysis.
IRA accounts averaged $121,983, a 4% drop from the prior quarter, while 403(b) accounts averaged $115,424, down 2%.
Causes of the Declines
Fidelity attributed these reductions primarily to market swings. The market faced turbulence in the first quarter due to uncertainties around tariffs and other policy issues, including impacts on popular index funds.
Persistent Contribution Rates
Retirement savings rates remained consistently high, per Fidelity's findings. For 401(k) accounts, employee contribution rates reached 9.5% in the first quarter, with employer contributions at 4.8%.
This combined rate of 14.3% set a record and approached Fidelity's recommended savings rate of 15%. Holders of 403(b) accounts averaged an 11.8% rate.
Although the first quarter of 2025 posed challenges for retirement savers, it’s encouraging to see people take a continuous savings approach which focuses on their long-term retirement goals. This approach will help individuals weather any type of market turmoil and stay on track to reach their retirement goals.
Saver Behavior Amid Volatility
In the first quarter, marked by market volatility, 17.4% of 401(k) holders increased their contribution sizes, compared to only 4.9% who lowered them. Similarly, 14.6% of 403(b) holders raised their rates.
Few individuals adjusted their asset allocations, with just 6% of 401(k) users and 4.7% of 403(b) users making changes. IRA holders increased contributions by 4.5% compared to the first quarter of 2024.
Broader Survey Insights
A separate Gallup survey released on Monday showed that 59% of U.S. adults have funds in a retirement savings account. Among non-retired individuals with such plans, half expect to have enough for a comfortable retirement.
