Fidelity Investments, which administers retirement accounts for more than 53 million savers, reported on March 4, 2026 that the average 401(k) balance climbed more than 11% over the year to $146,400 at the end of 2025, while a record share of account owners stepped up contributions to individual retirement accounts. For affluent households, the data is less a victory lap than a preview: balances that compound for another decade or two eventually become required withdrawals, taxed in full as ordinary income.
What changed
Average balances rose across account types: 401(k) balances were up more than 11% year over year to $146,400, 403(b) balances rose 13% to $133,500, and IRA balances gained 7% to $137,095, according to Fidelity's Q4 2025 analysis. The combined employee-and-employer 401(k) savings rate reached 14.2%, just under Fidelity's recommended 15% target. On the IRA side, the number of account owners making a contribution rose 25% from a year earlier, and total dollars contributed rose 23%, a record for a fourth quarter. Savers who kept contributing through five consecutive years averaged $304,200, up 16% from the end of 2024, and among 15-year continuous savers the average balance reached $508,700.
Who is affected
The gains are broad-based, but they compound fastest for higher earners who max out contributions and receive generous employer matches. A household with two working spouses, each averaging Fidelity's 5-year figure of roughly $300,000, is approaching $600,000 in tax-deferred savings well before typical retirement age — a balance that, left to grow, can turn into a substantial taxable event once required minimum distributions (RMDs) begin at age 73 (rising to 75 for those born in 1960 or later). Reported details did not break results out by income bracket, so figures here reflect account-wide averages rather than a high-earner subset.
The after-tax math: the RMD bill ahead
Example: a saver reaches Fidelity's 5-year average of $304,200 in a traditional 401(k) at age 45. Assuming a hypothetical 7% average annual return and no further contributions, the account would grow to roughly $1.65 million by age 70. At 73, the IRS life-expectancy divisor of 26.5 would produce a first-year RMD near $62,000 — income added on top of Social Security, pensions or part-time earnings. In a 32% marginal federal bracket, that single withdrawal generates about $19,800 in federal tax before any state tax, and the required withdrawal grows every year the account keeps compounding.
| Traditional account balance at RMD age | Approx. first-year RMD (divisor 26.5) | Federal tax at 32% |
|---|---|---|
| $800,000 | $30,200 | $9,660 |
| $1,650,000 | $62,300 | $19,940 |
| $3,000,000 | $113,200 | $36,225 |
Moves to discuss with a CPA or financial planner
Large, growing pretax balances are one of the more common reasons households explore Roth conversions during lower-income years, such as between retirement and the start of RMDs, spreading the tax cost of conversion across several years rather than facing one large forced withdrawal later. Qualified charitable distributions, available at 70½, can also satisfy part of an RMD without adding to taxable income for those who give to charity. Because Fidelity's data shows women's long-term balances growing faster than the overall average, married couples may also want to review how retirement assets are split between spouses for RMD and survivor-tax purposes.
What to watch
Watch for Vanguard's and other major recordkeepers' year-end data, which tend to follow Fidelity's release and can confirm or complicate the trend; continued growth in Roth balances as SECURE 2.0's mandate, effective in 2026, shifts catch-up contributions for participants earning above roughly $150,000 into Roth accounts; and whether Congress revisits RMD start ages or contribution limits as account balances — and the future tax revenue tied to them — keep climbing. Fidelity also noted that nearly 40% of women increased their savings rate in 2025, and that Gen Z participants raised contribution rates by more than 13% in the fourth quarter, trends worth watching for how they reshape average balances, and the eventual RMD math, over the coming decades.
Sources
- First reported Fidelity Q4 2025 Retirement Analysis: Average Annual 401(k) Account Balances Increase by Double Digits — Fidelity Investments
- Q4 2025 Retirement analysis — Fidelity Investments
- Vanguard, Fidelity data show new record highs in 401(k) savings — InvestmentNews
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