401(k) savings rate hits record, but balances drop 3%: Fidelity

(NewsNation) — Workers are putting away more in their 401(k) plans than ever, but market volatility dragged retirement account balances lower in the first quarter, a new analysis shows.

Average 401(k) balances fell 3% to $127,100 in the first three months of the year, according to Fidelity, one of the nation’s largest retirement plan providers.

Fidelity attributed the drop to “market swings,” which also impacted individual retirement accounts, where average balances fell 4% to $121,983.

But market fluctuations didn’t stop workers from saving, with the average 401(k) savings rate hitting a record 14.3% in the first quarter. That included an employee contribution rate of 9.5%, plus a 4.8% employer contribution.

“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, Fidelity’s president of workplace investing, said in a release.

The most recent 14.3% savings rate is the closest it’s ever been to Fidelity’s 15% recommended rate.

Five years ago, in 2020, the total savings rate was nearly a full percentage point lower at 13.5%. While that difference may seem small, over several decades, it can add up to tens of thousands more in a nest egg.

Roughly 17% of workers with Fidelity 401(k) accounts increased their savings rate in the first quarter, while just 5% decreased.

Fidelity’s quarterly analysis of 25,300 corporate plans covering 24.4 million participants also revealed significant differences between industries.

Employer 401(k) contributions were highest in the airline and petrochemical sectors at 8.2%, while retail and scientific & technical industries saw the lowest at 3.1% in the first quarter.

Meanwhile, the employee contribution rate was highest in the tech sector (12.8%), followed by pharmaceutical employees at 12.1%, Fidelity found.

401(k) savings rates and account balances also vary by age, with those nearing retirement contributing more. Here’s how different generations at Fidelity compared in the first quarter of 2025: