Despite recent economic challenges, American workers are saving more for retirement. According to Fidelity Investments, individual 401(k) savings rates have reached new highs, indicating strong financial habits among employees.
“We’re seeing a lot of positive savings behavior among employees,” said Michael Shamrell, Vice President of Workplace Thought Leadership at Fidelity, in an interview with Yahoo Finance. “Even with the ups and downs in the economy, people are continuing to save. They’re not pulling back or making major changes to their investments.”
Fidelity reports the average employee is now contributing 9.5% of their salary to a 401(k), while employers are adding an average of 4.8%. That brings the total savings rate to 14.3%—just shy of Fidelity’s long-standing recommendation of 15%. This marks a significant improvement from 2020, when the combined rate was 13.5%.
“For years, the individual savings rate was stuck around 8%,” Shamrell noted.
Account Balances Slightly Lower But Still Strong
Although savings rates have improved, the average 401(k) account balance dropped 3% in the first quarter of 2025. It fell from $131,700 at the end of 2024 to $127,100. However, this is still the second-highest average balance ever recorded by Fidelity. Compared to the beginning of 2024, balances are up 11%.
The data covers 24.4 million participants in 25,300 workplace retirement plans nationwide.
Most Savers Stay the Course
In the first quarter of 2025, 17.4% of Fidelity’s 401(k) customers increased their savings rate. Only 5% decreased their contributions, and less than 1% stopped saving altogether.
Meanwhile, just 6% of participants changed their investment mix. Of those, about 30% shifted to more conservative options.
Automatic Features Are Driving the Shift
One major reason for higher savings is automatic plan features. Many employers now automatically enroll new workers in retirement plans. Some also offer automatic annual increases in contribution rates.
Over 25% of 401(k) plans now include automatic increase options. In fact, 35% of plans automatically start employees at a 5% contribution rate, with increases of 1% per year until they reach about 10% of salary.
“This growing use of automatic increases is a big reason why we’re seeing savings rates go up,” Shamrell explained.
Though employees can opt out, few do. More than two-thirds of those who increased their contributions used the automatic increase tool.
Target-Date Funds Keep Investors on Track
Another key factor helping employees save is the popularity of target-date retirement funds. These funds adjust asset allocation over time, becoming more conservative as the investor approaches retirement age.
Over 60% of Fidelity’s 401(k) participants invest all their retirement savings in target-date funds. For Gen Z, that number jumps to 81%, largely due to automatic enrollment.
Target-date funds are often the default option in employer-sponsored plans. Shamrell highlighted their value in providing peace of mind: “They prevent people from making sudden changes to their portfolios when they’re nervous.”
Fewer 401(k) Millionaires This Year
Despite high savings rates, the number of 401(k) millionaires has dropped. In the first quarter of 2025, 512,000 participants had at least $1 million saved—down from 537,000 at the end of 2024.
“The number of people reaching that milestone tends to move with the market,” Shamrell said.
Still, millionaires make up a small share of Fidelity’s participants. “A million-dollar savings goal is something many people aspire to. It doesn’t mean you’ve ‘made it,’ but it’s a key threshold in long-term saving,” he added.
The Habits of 401(k) Millionaires
On average, Fidelity’s 401(k) millionaires have been saving for 27 years. That means they began around 1998 and have weathered major economic events—from the dot-com crash and 9/11 to the housing crisis and COVID-19 pandemic.
“They are the epitome of perseverance,” Shamrell said. “One of their biggest strengths is that they keep saving no matter what.”
These top savers contribute aggressively. Their average personal savings rate is 17.6%. With employer contributions, the total savings rate reaches 26.2%.
