Strong markets and steady savings habits are pushing more American workers into 401(k) millionaire status, even as a growing share taps those same accounts to cover financial emergencies – a tension that could test clients’ resolve as geopolitical risks rise.
Citing its own Q4 2025 retirement data, Fidelity Investments reports that the number of 401(k) millionaires in its plans climbed to 665,000 in the fourth quarter of 2025, up from 654,000 in the previous quarter. These investors typically have been contributing for about 25 years or more, with most in older cohorts, though millennials account for about 4% of the seven‑figure balances.
Average 401(k) balances at Fidelity reached $146,400 at year-end, up more than 11% from the prior-year quarter; the median balance was $34,400. Average 403(b) balances rose 13% to $133,500, with a median of $33,270. Individual retirement account balances increased 7% to an average of $137,095, though the median IRA held just $10,476.
The Investment Company Institute's latest quarterly read of retirement plan assets showed a collosal $48.1 trillion market as of Q3 2025, including $18.9 trillion in IRAs and $13.9 trillion in DC plans, of which roughly $10 trillion resided in 401(k) plans.
Vanguard’s retirement data tell a similar story at the top line. In a preview of its “How America Saves 2026” report, the firm said average participant account balances in plans it administers rose 13% in 2025 from year-end 2024, hitting a record $167,970, with a median of $44,115 – a 16% gain year over year. Strong domestic and international equity markets, along with a 7% rise in the US bond market, helped drive the third straight year of double-digit balance growth.
That run-up has unfolded against a volatile backdrop that now includes an escalating conflict in the Middle East, after Israel and the US launched an attack on Iran. For advisors, messaging discipline and time horizons may again be critical.
“Times like this can be concerning,” said Mike Shamrell, vice president of thought leadership at Fidelity. “In general, we encourage people not to make changes to their long-term strategies to react to short-term issues.”
Savings behavior has been a key support. Fidelity says the total savings rate for 401(k) participants – combining employee deferrals and employer contributions – held at 14.2% for the third consecutive year. Gen X workers are saving even more aggressively, with an average total rate of 15.4%, above Fidelity’s suggested 15% target, as they move into “pre‑tirement.”
Both providers highlight the role of catch‑up contributions among older workers. For 2026, the standard 401(k) and 403(b) catch‑up limit for those 50 and older will rise to $8,000 on top of a $24,500 base contribution limit. Vanguard reports that among participants ages 60 to 63, up to $11,250 in “super catch‑up” contributions was available, and 13% of eligible workers contributed above the standard $7,500 catch‑up cap.
Automation is quietly reshaping how many clients save. Vanguard says 14% of participants increased their savings rate or payroll deferral percentage in 2025, while 8% reduced it. Auto‑escalation features were a major driver: about 31% of participants had their deferral rate bumped up through annual auto‑escalation, contributing to 45% of savers increasing their savings.
“People are saving more, remaining invested, and being automatically rebalanced in a professional way,” said David Stinnett, head of strategic retirement consulting at Vanguard. He added that these behaviors are helping give workers a financial cushion when conditions deteriorate.
At the same time, Vanguard’s data underscore a K‑shaped reality beneath the record balances. The firm says 6% of workers in its plans took a hardship withdrawal in 2025, up from 4.8% in 2024 and roughly 2% before the pandemic. It marks the sixth straight annual increase since 2018, when Congress loosened hardship rules by eliminating the requirement to take a 401(k) loan first. The median hardship withdrawal was $1,900, with avoiding foreclosure or eviction and covering medical costs among the top reasons.
Automatic enrollment has pulled more workers into plans – 61% of Vanguard’s employer clients now auto‑enroll new hires, up from 34% in 2013 – but it has also given more people a pot of assets to raid when cash is tight. That trend is reinforced by newer rules that expand qualifying reasons for hardship distributions and allow smaller penalty‑free emergency withdrawals.
Fidelity’s data also show investors leaning harder into tax‑advantaged vehicles. The firm reports record fourth‑quarter IRA contribution activity, with the number of IRA account owners making contributions up 25% and total contributions up 23% from a year earlier. Generation X stands out again, with a 25% year‑over‑year increase in contributions, boosted in part by heavier Roth IRA use.
“Retirement savers remain committed to their financial futures by staying the course with their retirement savings,” said Sharon Brovelli, president of workplace investing at Fidelity, who said the firm will also be working with the Treasury department to offer Trump Accounts for younger generations of savers.
"Saving early and often, particularly in a tax-advantaged manner, is often the best way to save and invest for the future," Brovelli said.
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