Despite ongoing financial pressures, workers remain committed to their retirement goals, with many boosting their contribution rates and watching their savings grow.
According to Fidelity Investments’ latest quarterly analysis, a record 769,000 retirement savers have reached the million-dollar milestone in their 401(k) accounts. Average 401(k) balances grew by 10.5% in the second quarter, marking the strongest quarterly growth since the fourth quarter of 2020, driven in part by stock market gains.
The total average savings rate also remained at record levels for the second consecutive quarter, holding steady at 14.4% for 401(k) savers and 12% for 403(b) participants.
At the same time, Fidelity’s data shows that more savers have tapped their accounts for cash to cover expenses. In the second quarter, 19.5% of retirement savers had an outstanding 401(k) loan, up from 19.2% at the end of the first quarter. Meanwhile, the share of workers who took a hardship withdrawal increased year over year to 3%.
Average retirement account balances
The latest inflation data shows continued pressure on household budgets, with costs rising across the board, from gas to groceries. While the Consumer Price Index showed some prices decreasing month over month in July, the index was still 3.4% higher year over year.
Despite these pressures, employees have been contributing an average of 9.6% of their pay to their 401(k) accounts—a record high—while employers contributed an average of 4.8%.
In the second quarter, 12.1% of 401(k) participants increased their contribution rate, and 81.2% contributed enough to receive their employer’s full matching contribution.
IRA savers also increased their contributions by 36% compared to the second quarter of last year.
Here is a look at where average retirement savings balances currently stand:
Average IRA balance
$144,523
Average 401(k) balance
$155,800
Average 403(b) balance
$145,000
How each generation stacks up
Millennials’ average 401(k) balances increased by 14.2% during the quarter and 26.1% year over year, according to the latest data. Additionally, millennials and Gen X employees were the highest contributors to traditional IRAs, both averaging approximately $6,000.
If your account balance doesn’t align with the average, it doesn’t necessarily mean you are behind. It is common for retirement account balances to vary significantly across different generations.
Separate figures from Fidelity show that average 401(k) and IRA balances across generations range from $8,000 to $286,700.
It is also important to consider how your personal retirement savings goals, external sources of income, timeline, and other factors will affect your retirement account target and your current progress toward it.
“Someone earning $75,000 with a pension, modest lifestyle, and plans to work until 70 likely needs a very different amount than someone earning $300,000, spending $200,000 a year, and wanting to retire at 55,” said Brian Seymour, CFP® and founder of Prosperitage Wealth.
How to catch up on your retirement savings if you’re behind
If you are looking at your account balance and feel you may be behind, there are several actionable steps you can take to boost your retirement savings.
Increase your contributions enough to max out your employer’s match
If your employer offers to match your retirement contributions, it is highly advisable to increase your contributions enough to secure the full match.
For example, if your employer offers a 3% match on retirement contributions, aiming to save at least 3% of your income will get you up to 6% of your annual income, and you can work toward a larger percentage as your income grows.
Take advantage of catch-up contributions
If you are 50 or older, you are eligible to make catch-up contributions to certain retirement accounts. This allows you to contribute more than the standard annual limits, giving your accounts an added boost.
For 2026, savers aged 50 and older with 401(k), 403(b), 457 plans, and the federal government’s Thrift Savings Plan can make catch-up contributions of up to $8,000. Those aged 60 to 63 can contribute an additional $11,250 in 2026 in lieu of the $8,000, if their plan allows.
Look for ways to boost your income
Boosting your income gives you the ability to increase your retirement contributions, which in turn will grow your retirement savings and help you earn more interest on that balance.
If there are no immediate opportunities to increase your income at your current job through a promotion or raise, you might consider taking on a side hustle or exploring higher-paying roles.
“Review your investment strategy, debt, taxes, Social Security strategy, and retirement timeline. Sometimes the solution isn’t one giant change, but finding several smaller opportunities across the entire financial picture,” Seymour said.
“The most important thing is to stop waiting for the ‘perfect’ time to start. The best financial plan is like the best workout plan or diet—it is the strategy that you actually implement and stick with,” he said.
