Average 401(k) balances jumped 10.5 percent from March through June, marking the largest quarterly increase since 2020, according to Fidelity data released this week.
Fidelity participants in their 30s held an average balance of $75,200, while those in their 40s averaged $156,800. The year-over-year gain reached 13.1 percent, with individual retirement account balances up 10 percent over the same period. Fidelity reported 769,000 savers now hold $1 million or more in their 401(k)s.
Workers are contributing a historically high share of their pay into retirement accounts. Including employer contributions, 401(k) holders put away an average 14.4 percent of their paychecks—just shy of Fidelity's recommended 15 percent savings rate. More than eight in 10 participants contributed enough to receive their full employer match.
Kevan Melchiorre, a certified financial planner and co-founder of Tenet Wealth Partners, highlighted the value of employer matches. "A 401(k) is a fantastic retirement savings tool for a lot of reasons. I'd generally rank it as one of the more high-priority retirement savings options out there, especially when a match is provided," Melchiorre said.
Fidelity recommends having the equivalent of one's annual income saved for retirement by age 30 and three times the income by age 40. These benchmarks cover all retirement savings, not just 401(k) balances, and aim to support reaching 10 times annual income by age 67.
A 401(k) often represents only one piece of a broader financial picture that includes IRAs, taxable brokerage accounts, and health savings accounts. Melchiorre advises investing at least 15 percent of income for retirement across all investment accounts.
Adam Vega, a certified financial planner and managing partner at Avance Private Wealth Management, suggests evaluating overall net worth to assess retirement readiness. Vega prefers to see net worth approaching two to three times annual income by age 40. "Someone who has built substantial home equity and paid down debt may have a much stronger financial position than their 401(k) balance alone suggests," Vega said.
The actual amount needed for retirement depends on individual factors including planned retirement age and expected spending. In 2026, workers can contribute up to $24,500 to a 401(k), compared to $7,500 across traditional and Roth IRAs. Many employers also provide a matching contribution.
