If your retirement account felt a little healthier this spring, you are not alone. Fidelity’s Q2 2025 Retirement Analysis reports that average balances across 401(k), IRA, and 403(b) accounts reached record highs, extending a rebound that has been building for several quarters. The uptick reflects a stronger stock market, steady saving habits, and wider use of plan features designed to help people start and keep saving. For many, that combination has translated into bigger nest eggs and more confidence about long-term goals.
What Fidelity Measured
Fidelity’s analysis covers tens of millions of workplace plan and IRA accounts that it administers, offering a broad look across the retirement landscape. The report focuses on the second quarter of 2025 and compares results with the prior quarter and the same quarter a year earlier. It includes data on 401(k), 403(b), and IRAs, with added observations on health savings accounts paired with high-deductible health plans. The large sample helps smooth out short-term noise and highlights trends that matter for both new savers and those closing in on retirement.
Balances and Savings Behavior at a Glance
Average balances for 401(k), IRA, and 403(b) accounts climbed to new highs in Q2 and rose both quarter over quarter and year over year. More people crossed the million-dollar mark, a milestone that often rises and falls with market cycles but also reflects persistent saving through thick and thin. The combined employee and employer savings rate held close to the industry-recommended 15 percent level, which many experts view as a strong target for long-term success. Participation in workplace plans remained robust, helped by automatic enrollment and automatic escalation that make saving the default choice for new hires.
Roth contributions continued to gain momentum, particularly among younger savers and higher earners who want tax diversification in retirement. This shift tends to accelerate when markets are strong and when paychecks grow, since people often feel more comfortable balancing pre-tax and after-tax contributions. The overall picture suggests that better default design and thoughtful tax planning are working together to lift results.
Withdrawals, Loans, and Job-Change Leakage
Hardship withdrawals and plan loans stabilized or eased modestly from the peak levels seen during the most intense inflation periods. That is a welcome sign for account longevity, since pulling money early can lock in losses and forgo future compounding. Leakage during job changes remains a concern, but a larger share of departing workers chose rollovers rather than cash-outs compared with earlier periods. As more plans adopt automatic portability and education around rollover options improves, fewer small balances may get lost or withdrawn along the way. Keeping money in the retirement system is one of the simplest levers for long-term growth.
Investment Trends Driving Growth
Target date funds remained the predominant default option and the most common single-fund choice, supporting diversified, age-appropriate portfolios for millions of participants. Increased exposure to equities helped drive balance growth in Q2 as markets rallied and inflation pressures eased. Engagement with rebalancing and allocation tools improved, which can help participants maintain risk levels that match their time horizon. The stabilization of interest rates also supported both equity valuations and fixed income returns, giving balanced portfolios a tailwind. Consistency, more than timing, remains the key theme running through the data.
Why Accounts Rebounded
Stronger market performance set the stage, but steady contributions and renewed employer support kept progress on track. More employers enhanced or reinstated matches, which can lift savings rates without requiring higher employee contributions. Auto-enrollment and auto-escalation broadened across plans, and default contribution rates trended higher, pushing more participants closer to that 15 percent benchmark with match. Policy changes and plan innovation also played a role, including SECURE 2.0 features like employer matching on qualified student loan repayments and payroll-linked emergency savings accounts. Together, these shifts reduce friction, meet workers where they are, and nudge positive behavior that compounds over time.
Generational and Demographic Insights
Generation Z showed the fastest growth in participation and balances, starting from a low base but benefiting from target date defaults and a strong preference for Roth contributions. Millennials continued to build momentum, with greater use of Roth options and managed advice, although higher job mobility shaped rollover decisions more frequently. Generation X posted the highest contribution rates as retirement nears, including growing use of catch-up contributions and interest in retirement income guidance. Baby Boomers held the largest average balances and focused more on income strategies, required minimum distributions, and managing sequence-of-returns risk. From a gender perspective, women’s savings rates improved and participation gaps narrowed, though average balances still lag men’s due to wage differences and career breaks, which underscores the power of consistent saving and supportive plan features.
Plan Design Shifts You May Notice
Automatic features are spreading, and defaults are nudging people to stronger habits sooner. Target date funds remain the qualified default investment alternative in many plans, while managed accounts and digital advice tools are drawing more interest for those wanting personalized guidance. A growing number of employers now match payments on qualified student loans, helping workers build retirement savings without forcing a trade-off with debt repayment. Payroll-linked emergency savings accounts are gaining traction, and early evidence suggests they can reduce hardship withdrawals and improve financial resilience. Expanded Roth availability and after-tax features give savers more tax flexibility, including backdoor Roth strategies where the plan allows.
HSAs in the Retirement Mix
Health Savings Accounts are increasingly part of the retirement conversation, especially when paired with high-deductible health plans. More participants contributed to HSAs, and a growing share treat them as long-term vehicles rather than spend-as-you-go accounts. The triple tax advantage can make HSAs a powerful complement to 401(k)s and IRAs, particularly for those who can cover current medical costs from cash flow. As with retirement plans, investing HSA balances and maintaining an appropriate asset allocation are key to unlocking long-term potential. Integrating HSAs into an overall retirement strategy can improve both health and wealth outcomes in later life.
For savers, the main message is encouraging. Markets helped, but behavior and plan design carried weight too. Staying enrolled, increasing contributions over time, choosing diversified investments, and avoiding unnecessary withdrawals can turn a good quarter into a durable trajectory. The rebound is real, and with thoughtful steps, you can make the most of it.