This explains the figures; it is not financial advice.
The headline number
Retirement savers had a good 2025. The average 401(k) balance at Fidelity Investments — which administers plans for nearly 25 million 401(k) participants — rose more than 11% from a year earlier, the third consecutive year of double-digit gains, per its Q4 2025 retirement analysis. That put the average balance at roughly $146,400, according to the firm's figures. Vanguard, drawing on its own plans, reported an even higher average of about $167,970.
A 401(k) is a workplace retirement account: you contribute part of each paycheck, the money is invested (usually in mutual or index funds) and grows tax-deferred until you withdraw it in retirement, often with an employer match — extra money the company adds, typically up to a set share of your pay.
Average vs. median: the number that matters
Here's the catch. An average is pulled upward by a relatively small number of savers with very large balances. The median — the midpoint, where half have more and half have less — better reflects a typical worker. And the medians are far lower: Fidelity's was about $34,400, Vanguard's around $44,115 — roughly a quarter of its own average.
The gap matters because it changes the benchmark. A 50-year-old measuring themselves against a $146,000 "average" is using the wrong yardstick; the typical saver their age holds far less. Balances also rise steeply with age and income — workers in their 60s hold many times what those in their 20s do — so a single headline figure blurs enormous variation.
The million-dollar club
At the top end, the number of 401(k) "millionaires" — accounts worth $1 million or more — hit a record of about 665,000 in Fidelity's plans, up from roughly 422,000 at the end of 2023. These are overwhelmingly people who have contributed steadily for decades: among workers who saved continuously in a Fidelity 401(k) for five years, the average balance reached about $304,200, and women who stayed in their plan for 15 years averaged $508,700, the firm said. The common thread is time and consistency, not timing the market.
What drove the records
Two forces did the work. First, strong stock-market returns in 2025 lifted the value of existing holdings. Second, people kept contributing: Fidelity put the total savings rate — employee plus employer — at about 14.2% of pay, just shy of the 15% it recommends.
A quiet structural shift is helping too. Automatic enrollment — signing new hires up for the 401(k) by default rather than making them opt in — now covers a majority of Vanguard-administered plans, up from a small minority two decades ago, and the 2025 SECURE 2.0 rules require many new plans to use it. Defaulting people in, and nudging their contribution rate up automatically, lifts participation without anyone lifting a finger.
The sober footnote
Records at the top don't mean everyone is set. Averages are skewed by big balances, many private-sector workers have no workplace plan at all (and so don't appear in these surveys), and the Employee Benefit Research Institute has projected that a large share of Boomer and Gen X households will fall short of covering basic costs in retirement. Balances also fall when markets do — Fidelity's own figures dipped earlier in 2025 before rebounding. The encouraging takeaway is narrower than the headline: for those who can save consistently, with an employer match and time on their side, the system still compounds powerfully. The number to watch is your own trajectory, not the average.
