Five Employments Still Provided Pensions
The sudden emergence of 401K and other investment-based plans has led to an declining popularity across all sectors.
No brand – Lifestyle
Consistently saving on a 401(k) is one of the best things you can do for retirement. Social Security probably won’t pay you enough money to cover your living expenses. Therefore, some income is required to compensate for these monthly profits. And the 401(k) is the perfect place to find it.
Not only is the 401(k) funded immediately from the payroll deduction, it is convenient, but many companies also offer workers a 401(k) match. If you donate some money yourself, it’s virtually free money for your retirement.
You might want to know how the balance of your 401(k) plan compares to the average saver. For that reason, Fidelity has some new data. And it may surprise you.
The balance is decreasing, but that’s not the reason for panic
Fidelity reports that at the end of the first quarter of 2025, its average 401(k) balance was $127,100. This is down 3% from the last quarter.
The reason for the decline in the average 401(k) balance is likely due to market volatility, which actually lasted well beyond the first quarter of the year. It is also worth noting that the balance of some people may have already recovered from that volatility. As Fidelity reports 401(k) data per quarter, recent updates are not reflected in the numbers released.
Don’t stress short-term changes
Don’t panic if your 401(k) plan loses value from the beginning of the year to the end of the first quarter, or between the beginning of the year and the present. Balance fluctuations are normal and can occur for several reasons.
The key is to regularly fund the 401(k). In the meantime, make sure you’re at least taking home the full employer match. Also make sure you are investing your 401(k) wisely and not losing too much money in the fees.
To minimize investment costs, we recommend supporting passively managed index funds at 401(k). Be aware of the target date funds. They may seem like an easy investment. However, in the sense that “easy” you are not getting the revenue you want from your retirement savings.
What happens if the 401(k) balance is much lower?
Your 401(k) balance may be close to $127,100. But that doesn’t lead to panic either.
The $127,100 balance represents the average for savers of all ages. It’s because if you’re 34, you might not have as much money as someone who’s 54 and works 20 years longer than you have. Not only did older workers give more time to contribute to their savings, they also had complex returns over the years.
However, if you are not satisfied with the progress you have made with your 401(k), assess your spending. Can you cut in some regions to free up more money for savings? If not, can you get a side hustle and fund that 401(k) at a faster pace?
Also, the balance of the 401(k) may be lower than you would like because you are investing your money modestly. Before you exercise, look at the big picture. If necessary, sit with a financial advisor who can provide guidance on investing in a 401(k) and finding a room on your budget for continuous contributions.
The Motley Fool is a partner at USA Today, providing financial news, analysis and commentary designed to help people control their financial lives. The content is produced independently of USA Today.
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