The average 401(k) contribution rate has reached a new peak of 14.3% in Q1 2025, according to Fidelity Investments. This figure includes both employee and employer contributions and is just shy of the 15% savings rate that financial advisors often recommend for a secure retirement.
The Average 401(k) Contribution Rate Just Reached a New Peak
| Insight | Stat |
|---|---|
| Record-High 401(k) Savings Rate | 14.3% total contribution rate in Q1 2025 |
| Average 401(k) Balance | $127,100 as of Q1 2025 |
| Automatic Enrollment Impact | Participants with auto-enrollment saved 12.7% on average |
The Rise in 401(k) Contribution Rates
In the first quarter of 2025, the average 401(k) savings rate reached a record high of 14.3%, according to Fidelity Investments. This rate includes both employee and employer contributions and is just below the 15% annual savings rate that financial advisors often recommend over a person’s career.
This increase in savings rates is attributed to factors such as automatic enrollment and annual contribution escalation features in 401(k) plans. More than a third of companies that use automatic enrollment now start workers at 5% of pay or higher, up from the historical 3% norm.
Average 401(k) Balances by Age
According to Vanguard’s 2024 report, the average 401(k) balance increased by 19% compared to the previous year, showing that Americans are setting aside more for retirement. The average balance was $134,128.
Here’s how average 401(k) balances break down by age:
- Under 25: $7,351
- 25-34: $37,557
- 35-44: $91,281
- 45-54: $168,646
- 55-64: $244,750
- 65 and older: $272,588
These figures highlight the importance of starting to save early and increasing contributions over time to build a substantial retirement nest egg.
Employer Contributions and Plan Features
Employer contributions play a significant role in boosting overall savings rates. The average employer contribution was 4.6% of pay, according to Vanguard.
Additionally, plan features such as automatic enrollment and annual escalation have been effective in increasing participation and contribution rates. Participants automatically enrolled in their plan had an average total contribution rate of 12.7% in 2023, compared with 10.3% for those voluntarily enrolled.
Staying on Track with Retirement Savings
It’s essential to regularly review your retirement savings strategy to ensure you’re on track to meet your goals. Consider increasing your contribution rate, especially if you’re not yet at the recommended 15% total savings rate. Take advantage of employer matching contributions and plan features like automatic escalation to boost your savings.
If you’re unsure about your retirement readiness, consult with a financial advisor or use online retirement calculators to assess your progress and make necessary adjustments.
