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While the second quarter of the year may be a different outcome following market volatility on Wall Street after Trump’s tariffs announcement, Q1 average contribution rate to 401(k) plans hit 14.3%, close to Fidelity’s suggested savings rate of 15%, according to Fidelity Q1 2025 Retirement Analysis: Retirement Savings Rates Reach Record High While Average Account Balances Are Lower.
Average 401(k), 403(b), and IRA balances ended the quarter slightly lower, primarily as a result of market swings, but encouragingly, both employer and employee savings rates stayed consistently high, with the total 403(b) savings rate holding steady at 11.8%, according to Fidelity. One silver lining, however, is that savings rates remained consistent, with the average 403(b) savings rate holding at 11.8%.
But both employee and employer savings rates remained strong – 11.8% for 403(b) and a record 14.3% for 401(k), made up of 9.5% for employees and high 4.8% contribution rate for employers.
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“Employers continue to understand the value of a company contribution to their employees and, as a result, we see consistent contribution rates,” said Michael Shamrell, VP of Workplace Thought Leadership at Fidelity. ”We tend to see a bit of an increase in the first quarter due to some employers that offer profit sharing, which generally occurs in January, or January and June.”
In Q1, the average 401(k) balance dropped to $127,100, a 3% decline from the previous quarter, according to Fidelity, with boomers averaging $239,600, Gen X at $187,400 and millennials at $66,800.
Despite significant swings in financial markets in the first quarter, savings behavior across Fidelity’s retirement platform stayed fairly consistent. Most participants continued to contribute to their retirement savings accounts and continued to invest in stock. Of the participants that made a change to their allocation, 22.2% of 401(k) participants and 14.8% of 403(b) participants moved some of their savings into more conservative investments.
“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,” said Sharon Brovelli, president of Workplace Investing at Fidelity Investments. “This approach will help individuals weather any type of market turmoil and stay on track to reach their retirement goals.”
Total 401(k) savings rates hit a record high in Q1, driven by the employee contribution rate reaching a milestone of 9.5%, and an employer contribution rate of 4.8%, which is the highest level to date among employers. The most popular match on Fidelity’s platform is based on a 5% employee contribution rate and matches 100% on the first 3% of an employee’s contribution, 50% on the next 2%.
Related: Trump’s tariffs: What it means for 401(k) retirement plans
Fidelity’s latest analysis, which accounts for more than 50 million IRA, 401(k), and 403(b) retirement accounts, shines a spotlight on how retirement savers fared during the market volatility of the first quarter. The good news: despite the market swings, participants stayed fairly consistent with their contribution rate and asset allocation.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
