Joy To The Portfolio: Record Retirement Accounts Have Come
This time of year usually comes with extra treats, extra cheer, and a few extra client check-ins. Thankfully, advisors can add one more delight to the season — some genuinely good news for clients' portfolios.
That cheer isn't just seasonal: over the past six months, major market indexes have steadily climbed, hitting fresh record highs — up roughly 15% on the year — and overcoming the inflation and tariff scares which nearly put markets in a bear market earlier this year. It's one thing to read about the market rally in the news, and another to see it reflected in real retirement accounts.
That market backdrop shows up clearly in Fidelity's latest Q3 2025 analysis — which has data from over 50 million retirement accounts. According to the data, the average 401(k), 403(b), and IRA balances all reached new all-time highs for the second consecutive quarter.
The average 401(k) balance has steadily increased from $127,100 in Q1, $137,800 in Q2, to $144,400 in Q3, representing an increase of 5% quarter-over-quarter, and 14% since Q1. IRAs also increased 5% quarter-over-quarter, climbing from $131,366 to $137,902. Last but not least, 403(b) also saw a 5% increase, bringing the average account balance to $131,200, up from $125,400 in Q2.
As great as the market has been, it's not doing all the heavy lifting. Despite this year being very volatile, households didn't sweat the dips and have remained remarkably consistent throughout the year. Total 401(k) savings rates held steady at 14.2% for the second quarter in a row — made up of a 9.5% employee contribution and a 4.7% employer match.
Where things get especially interesting is how different generations are choosing to save. Roth accounts continue to gain traction, led by younger investors. Nearly 17.5% of all 401(k) participants now contribute to a Roth 401(k), up from 15.9% a year ago. Among Millennials and Gen Z, that number climbs to 19% and 20%, respectively. In IRAs, the preference is even more pronounced — Gen Z directs 95% of contributions to Roth accounts, compared with 75% for Millennials and 66% for Gen X.
This shift reflects more than tax math. Younger savers appear comfortable trading today's tax bill for tomorrow's flexibility — an important planning conversation for advisors helping clients think long-term.
In addition, a notable milestone also took place this past quarter as the average balance for women who have been in their 401(k) for 15 years, crossed the half-million-dollar mark for the first time ever, rising to $501,100. This marks a 16.5% increase from Q3 2024.
As the end of the year winds down, this data offers a timely message for client conversations: markets may provide the tailwind, but consistent behavior — saving steadily, staying invested, and using the right vehicles — is what quietly builds momentum over time. And, as Albert Einstein once said, "Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it."
Read Next:
Photo: Shutterstock