Retirement savers shook off 2025 volatility — and many became millionaires

Last year, volatility roared into retirement accounts repeatedly, sending stocks sliding before bouncing back.

Retirement savers shook it off — and many became millionaires.

At year-end, the average 401(k) balance rose by 11% to $146,100, according to a new report from Fidelity Investments, while the number of investors with $1 million or more in their retirement accounts hit a new high.

“An important part of any successful retirement strategy is taking a long-term approach to retirement savings and not making changes based on short-term events,” Michael Shamrell, vice president of workplace thought leadership at Fidelity Investments, told Yahoo Finance.

“Despite the market swings and economic uncertainty that workers faced in 2025,” he added, “we continued to see both employees, as well as their employers, make consistent retirement savings contributions, which has helped boost overall retirement savings to record levels.”

Average annual 401(k) and 403(b) account balances jumped by double digits for the third straight year. The average IRA balance increased 7% over last year.

The 401(k) data is drawn from Fidelity’s thousands of defined contribution plans at various companies and nonprofits nationwide with more than 40 million participants, as well as 18.9 million IRA accounts.

These gains reflect the US market’s lofty 2025 performance, when the S&P 500 (^GSPC) rose 16.9 %, the Nasdaq Composite (^IXIC) was up more than 20%, and the small-cap Russell 2000 (^RUT) was up around 13%.

Read more: How much can you contribute to your 401(k) in 2026?

Davids’ Adventures Photos via Getty Images

For long-term savers who have been in their 401(k) plan with the same employer for five years straight, the average balance increased 16% from year-end 2024.

Much of that can be attributed to never-wavering saving habits. The average savings rate for that cohort was 14.2%, on par with 2024. That includes the average employee contribution rate of 9.5% of their gross income, along with the average employer match of 4.7%.

Nearly 40% of workers bumped up their 401(k) contribution rate at some point in 2025, compared with only 10.6% who reduced it.

More good news: IRA contributions increased 25% from the prior year, and total contributions were up 23% — marking a record high for IRA contributions made between the end of September and year-end, according to the data.

Read more: Find the 10 best high-yield savings accounts

The flashing finding, though, goes to those scrappy Gen Xers — the oldest of whom turn 61 this year — who throttled up their contributions by 25% year over year.

The average Gen X savings rate now tops 15%, compared to 13.5% for millennials and 11.3% for Gen Z.

“Gen X are fully aware they are now the generation moving towards retirement, with the oldest in this segment about to turn 60,” Fidelity’s Shamrell said.

“This generation is also at the peak earning potential of their careers, and therefore may have more to contribute to retirement, including through catch-up contributions for those who meet the requirements,” he said.

Millennials and Gen Z workers are stashing more of their savings in Roth 401(k)s, and Gen Z workers are continuing to leverage target date funds, according to the report.

Meanwhile, in the “earlier you start, the better off you will be” category, when it comes to retirement savings, more than 13% of Gen Z participants in their 20s increased their contribution rate from the end of September to the end of December.

The pool of 401(k) millionaires hit an all-time high, totaling 665,000 at the end of December. That’s a sizable bump when compared to the first quarter, when 512,000 savers had at least $1 million in their nest egg.

According to the Fidelity rundown, Gen X makes up the bulk of the millionaire pool, accounting for 60.3%. Boomers make up 34.6% (because they are now pulling from their retirement), and millennials make up 4.1%.

“Historically, the 401(k) millionaires have been Gen X and boomers,” Shamrell said, “but as they are now getting further in their careers, we’re starting to see millennials reach the million-dollar milestone, which is an interesting change to note.”

Have a question about retirement? Personal finances? Anything career-related? Click here to drop Kerry Hannon a note.

If you’re investing money automatically in your employer-sponsored retirement plan or an IRA, you’re investing when the market is soaring and when it’s sliding back. That generally means the return on your investments evens out over the long haul.

Another major factor that helps keep savers steady during stock market swings: investing in target date funds. Some 63% of Fidelity savers had all their 401(k) savings in a target date fund.

When you save and invest in a target date retirement fund, your account is automatically adjusting your balance of stocks and bonds, typically both US and international, changing to a more conservative blend as the target date approaches.

Fixed-income investments are also key. Across Fidelity’s 401(k) platform, less than 7% of savers have a 100% equity allocation in their 401(k).

While stocks certainly provide the juice for investment growth in the good times, bond holdings provide the calm and consistency retirement savers depend on when economic news roils the markets.

Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky and X.

Sign up for the Mind Your Money newsletter

Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more

Read the latest financial and business news from Yahoo Finance

Source link