How are tariffs intertwined with 401(k) retirement savings?
Experts say rising tariffs can lead to several factors that affect your retirement savings.
After years of proper advancement, Americans with 401(k) accounts are finally saved well for retirement.
This is the point from the latest retirement savings report from Fidelity, a leading planning manager.
In the first three months of 2025, the total 401(k) savings rate for fidelity plans reached 14.3%. This is the highest ever, approaching the 15% benchmark that many financial advisors have set for optimal retirement savings.
Ten years ago, in the first quarter of 2015, employees donated 8.1% of their pre-tax salary to the 401(k) plan. Employers accounted for 4.4% of the matching contributions, with a total savings rate of 12.5%.
In contrast, in the first quarter of 2025, employees saved 9.5% of their pay, with employers consistent with 4.8%, with a total savings rate of 14.3%.
How much does it need to contribute to the 401(k)?
Retirement planners recommend a 15% contribution rate for the 401(k) plan on this theory. If you save at least throughout the year of work, you will be able to live comfortably in retirement.
“We’re excited to announce that we’re a great place to go,” said Mike Shamrell, Vice President of Sound Leadership at Fidelity Investments.
The gentle ramp-up at the 401(k) contribution rate reflects some positive trends in the retirement savings industry, Shamrell said.
4.8% employer matches are the highest ever. Employers are increasingly offering to match at least 5% of workers’ wages with 401(k) contributions as a way to attract and retain talented employees. A typical formula matches the first 3% of dollars salary dollars and the next 2% dollars with 50 cents.
“It’s basically free money to save for retirement, and that’s something employees cherish,” says Mindy Yu, senior director of investments at Betterment, an online investment manager.
Big 401(k) Trends: Auto-registration, Auto-escalation
Another major trend affecting the 401(k) contribution rate is autofill. From 2025 onwards, most new 401(k) plans require employees to automatically register instead of leaving the workers to make decisions.
Many old 401(k) plans are voluntary. This means that employees must sign up to participate. Under auto-registration, employees who do nothing will opt in.
Over a third of the Fidelity Plan automatically establishes 401(k)S employees with a contribution rate of 5% or more.
“Unless new employment takes action, they will save for the plan,” said Rob Austin, head of solutions for human capital technology and service provider Alight Solutions. “It was very different from the way 401(k) first started, and I had to register myself.”
Another evolving feature allows employees to automatically increase their contributions of 401(k) each year. Almost three-quarters of fidelity planning have an auto-escalation feature.
Are retirement savings finally catching up?
Retirement plan contributions are rising at the moment when tax-beneficial retirement savings seem to be catching up in the American workplace.
Currently, half of all private sector workers are participating in the 2010 project between about two-fifths and 401(k) project, federal data shows. Some retirement experts view 50% of participation as a turning point after retirement.
More private sector Americans are taking part in the 401(k) plan, at least in part, as more employers offer them. According to the Bureau of Labor Statistics, between 2014 and 2024, employee access to the 401(k) style plan increased from 60% to 70%.
These positive signs are important, according to retirement experts, as many Americans can’t save them because of retirement.
Wealthy workers accumulate more retirement savings
The wealthiest Americans are most likely to accumulate retirement savings. According to a federal survey of consumer finance, households with the top 10% of income held a median retirement account in 2022 with $559,000. An overwhelming 93% of these households held retirement accounts.
For middle-income Americans, Americans in the 40th-60th percentile by income, the median retirement plan was held at just $39,000, with almost half of the group missing retirement accounts.
Many small employers do not offer 401(k) plans. AARP analysis shows that almost half of workers have no access to retirement plans at work.
The Americans achieved a record rate of 401(k) savings when their account balances were slipping.
The average 401(k) balance fell 3% from late 2024 to early 2025 to early 2025, with the average falling to $127,100, Fidelity reports. The decline occurred during a period of market volatility as President Trump took office and launched a trade war.
Gen Z has a good retirement savings habit
If the 401(k) contribution rate continues to rise, investment experts say one reason will be a good savings habit among younger workers.
Generation Z workers have a total savings rate of 401(k) at 11.2%, and fidelity reported not far behind the savings rates of millennials (13.5%) and generation X (15.4%). As Gen Z is decades away from retirement, the savings rate for young adults is important.
“I think most of the newer, younger cohorts are in this environment where they learn that they need to save a lot,” Austin said.
Young workers know that a decline in pensions could be a source of retirement income, and that social security could face a shortage when they retire.
“The risk of shortages is very real,” Yu said.
Fidelity data shows that younger workers are more likely to contribute to loss 401(k) than older workers. He said that Ross’ contributions are already taxed, and that these workers are making effective contributions at a higher rate.