The average 401(k) balance fell 3% in the first quarter of 2025 to $127,100, according to Fidelity Investments, the nation’s largest provider of 401(k) plans. The average individual retirement account balance also sank 4% from the previous quarter to $121,983. However, both 401(k) and IRA balances were up year over year.
Despite market swings, most savers kept their contribution rate steady, Fidelity found. The average 401(k) contribution rate, including employer and employee contributions, increased to 14.3%, just shy of Fidelity’s suggested savings rate of 15%. “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,” Sharon Brovelli, president of workplace investing at Fidelity Investments, said in a statement.
“This approach will help individuals weather any type of market turmoil and stay on track.”
U.S. markets have been under pressure ever since the White House announced country-specific tariffs on April 2. Ongoing trade tensions between the U.S. and European Union, along with other geopolitical uncertainties, have contributed to market volatility.
Retirement account balances show resilience
However, markets have recently rebounded from earlier losses. As of Wednesday morning, major indexes like the Dow and S&P 500 were up around 1% in 2025. “It’s important to not get too unnerved by market swings,” said Mike Shamrell, Fidelity’s vice president of thought leadership.
Even for those nearing retirement age, savings should have a time horizon of at least 10 to 20 years, he explained, emphasizing the importance of having a long-term strategy. Intervening or trying to time the market is often counterproductive, said Gil Baumgarten, CEO and founder of Segment Wealth Management in Houston. “People lose sight of the long-term benefits of investing in volatile assets; they stay focused on short-term market movements, and had they stayed put, the market would have corrected itself,” he said.
“The math is compelling to look past all that and let the stock market work itself out.”
For example, a significant percentage of gains in the S&P 500 over the past three decades occurred during recessions, often in proximity to the worst days, according to a Wells Fargo analysis. Despite the ups and downs, the S&P 500 index has delivered positive returns 77% of the time since 1950. “Really, you should just be betting on equities rising over time,” Baumgarten added.
