401(k) Performance in 2025: Turbulent Times and Record Highs
The first and second quarters of 2025 proved to be rocky for investors, particularly those relying on 401(k) plans or other workplace retirement options.
After a significant drop in April—triggered by the Trump administration’s unclear tariff announcements—the stock market managed a rebound, ultimately closing the second quarter at an all-time high.
By June 30, the average 401(k) balance reached a noteworthy $137,800, marking an 8.4% increase from $127,100 at the end of the first quarter. This was also up 4.6% from the $131,700 recorded at the end of the previous year, according to data from Fidelity Investments, which oversees a large portion of workplace retirement accounts.
A notable aspect was the increased participation in savings during the second quarter. Fidelity found that 401(k) participants were contributing, on average, just over 14% of their income.
Interestingly, about 5.5% of participants adjusted their asset allocation during this time, although Fidelity hasn’t shared details about the specific changes made.
Your own spending requirements, health, job timeline, and living costs ultimately play a role in retirement savings. Some may need more than $1 million in their Social Security benefits to retire comfortably, or so many Americans seem to believe.
But, what’s the situation for those with 401(k) accounts?
By the end of the second quarter, the number of accounts with balances exceeding $1 million surged to a record 595,000, up from 512,000 at the end of the first quarter and 497,000 the previous year. However, even with this increase, those million-dollar accounts only represent about 2.4% of all accounts in Fidelity’s database.
The median balance for this group was $1.4 million, indicating that half of the account holders had more. This is a slight rise from $1.38 million at the first quarter’s end and $1.37 million last year.
Among those with million-dollar accounts, the majority—about 346,000—belong to Gen Xers, a group now beginning to approach retirement. In the previous quarter, only 287,000 accounts were in this category for that generation.
Additionally, there were 628,000 accounts from Gen Xers with balances ranging between $587,000 and just under $1 million.
While these increases may be encouraging, they still represent a small fraction of the 65 million Gen Xers living in the U.S. today.
In a broader context, the median balance for all generations of 401(k) participants stood at just $32,300 at the end of June, a rise from $29,800 at the end of the first quarter. This relatively low figure reflects the fact that Gen Z is now entering the workforce and beginning to save.
For Gen Xers alone, the median balance is slightly better at $62,400, but this means half of their accounts contain less.
Ultimately, understanding how your savings stack up against the average is crucial. It’s not just about the numbers; it’s about whether your savings habits can support a comfortable retirement.
