Average retirement account balances reached record highs during the third quarter as participants consistently saved amid positive stock market performance, according to Fidelity Investments’ latest retirement report. The analysis included 401(k), IRA, and 403(b) accounts.
Despite ongoing concerns about the strength of the economy, both 401(k) and 403(b) participants maintained steady savings rates through Q3. The average 401(k) balance increased 5% from its previous record in Q2, marking the sixth quarter-over-quarter increase in the past eight quarters, the report noted.
Retirement account balances continued to show steady growth across all account types. IRA accounts averaged $137,902, up 5% from the previous quarter and 7% from a year ago, reflecting a 17% increase since 2020 and a 57% jump over the past decade. 401(k) accounts averaged $144,400, a 5% rise from Q2, 9% higher year-over-year, 32% above 2020, and 70% higher than Q3 2015. 403(b) accounts averaged $131,200, increasing 5% from the prior quarter, 10% from last year, 37% since 2020, and an impressive 92% growth over the past ten years.
“Americans are continuing to exhibit impactful savings behaviors such as staying the course and focusing on long-term goals, which clearly is having a positive effect on retirement savings,” said Sharon Brovelli, president of Workplace Investing at Fidelity Investments. “To see balances and saving behaviors increase across all savings vehicles is encouraging, especially as savers continue to navigate an uncertain economic environment.”
401(k) savings rates remained steady, with the total contribution rate holding at 14.2% for the second consecutive quarter. This includes an employee contribution rate of 9.5% and an employer contribution rate of 4.7%, close to Fidelity’s recommended 15% savings target.
Female long-term savers are making notable gains. Women who have been in their 401(k) for 15 continuous years now average $501,100, a 16.5% increase from Q3 2024 and the first time their average balance has crossed the half-million-dollar mark.
Roth 401(k) adoption continues to rise, with 17.5% of participants contributing to a Roth 401(k), up from 15.9% a year ago. Younger generations are leading this trend, with 19% of millennials and 20% of Gen Z choosing Roth 401(k) contributions. Roth IRAs remain particularly popular among Gen Z, who allocate 95% of their IRA contributions to Roth accounts, compared with 75% of millennials and 66% of Gen X participants.
The analysis also highlights growing adoption of automatic rollover capabilities that allow employees to move savings between employers. Since going live in October 2022, more than 9,200 Fidelity 401(k) plans have adopted auto portability, preserving $24 million in retirement savings, the company said.
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