US Retirement Savings Rates Reach Record High in First Quarter: Fidelity

The data show Americans are earning more and spending less amid slowing inflation.

An image of US bank notes, and credit and debit cards. Madalina Vasiliu/The Epoch Times

Americans saved for their golden years at a record pace to kick off 2025, a new study by Fidelity Investments found.

In the first quarter, 401(k) savings rates reached an all-time high of 14.3 percent. This was driven by a 9.5 percent employee contribution rate and a 4.8 percent employer contribution rate, falling short of Fidelity’s suggested savings rate of 15 percent.

The savings rate for 403(b) retirement accounts—plans established for public employees and nonprofit organizations—held steady at 11.8 percent.

Average 401(k) retirement account balances totaled $127,100, sliding 3 percent from the fourth quarter of 2024. However, according to researchers, balances increased by 1 percent from the previous year.

Individual retirement account (IRA) contributions rose 4.5 percent year over year. Baby boomers—generally defined as those born between 1946 and 1964—led the way, with average contributions surging 21 percent from the first quarter of 2024.

The increase in savings can enable individuals to weather market storms and achieve their retirement goals, says Sharon Brovelli, president of workplace investing at Fidelity Investments.

“Although the first quarter of 2025 posed challenges for retirement savers, it’s encouraging to see people take a continuous savings approach which focuses on their long-term retirement goals,” Brovelli said in a statement.

Financial markets have been in turmoil since President Donald Trump unveiled his sweeping global tariff plans on April 2. Although the leading benchmark indexes suffered sharp losses similar to those seen at the onset of the coronavirus pandemic, markets have turned positive for the year.

The blue-chip Dow Jones Industrial Average is now up 0.1 percent. The broader S&P 500 Index has risen nearly 2 percent. The tech-heavy Nasdaq Composite Index increased 1 percent.

Boost to Savings

At the start of 2025, a Yahoo Finance/Marist Poll survey found that most Americans were dissatisfied with their savings.

As the year has progressed, more people are tightening their belts and overhauling their savings habits.

In April, according to the Bureau of Economic Analysis, the personal saving rate reached a near-one-year high of 4.9 percent.

While this remains far below the double-digit levels observed during the pandemic, the recent uptick has been notable for an economy heavily dependent on consumption.

Personal spending slowed in April to 0.2 percent from 0.7 percent in March. However, personal income accelerated at a higher-than-expected pace of 0.8 percent, up slightly from the upwardly revised 0.7 percent in the previous month.

However, if consumers plan to sit on the sidelines, the trend may not harm growth prospects anytime soon.

The Federal Reserve Bank of Atlanta’s GDPNow Model estimate suggests the U.S. economy will expand by 4.6 percent in the second quarter.

Another key economic development has been the sharp slowdown in inflation this year.

The headline annual inflation rate in the April Consumer Price Index (CPI) eased to 2.3 percent, the lowest since February 2021. Likewise, the annual Personal Consumption Expenditures (PCE) price index—the Federal Reserve’s preferred inflation measure slowed to a seven-month low of 2.1 percent.

People shop at a grocery store in New York City, on March 12, 2025. Samira Bouaou/The Epoch Times

This has allowed workers to keep pace with inflation incrementally.

Real (inflation-adjusted) average hourly earnings were up 1.4 percent in April compared to the same time a year ago. Real average weekly earnings were also up 1.7 percent year over year.

According to a September 2024 study by Bankrate, Americans’ paychecks are expected to recover from post-crisis inflation by the summer.

At the same time, nominal wage growth has been stagnant over the last few months. The Atlanta Federal Reserve’s three-month moving average of median hourly wage growth was 4.3 percent in April for the third straight month. This is down from the 5.3 percent recorded a year ago.

If the One Big Beautiful Bill Act makes its way to the president’s desk, estimates suggest U.S. households could keep more of their incomes.

Last month, the House Ways and Means Committee projected that the legislation could provide a $1,300 tax cut for the average American family.

Still, after years of struggling to save for the future or unforeseen circumstances, many Americans are trying to catch up.

A May study, for example, by financial services firm Empower highlighted that people rate their happiness with their retirement savings at 4.54 out of 10.

Survey participants identified inadequate income and high expenses as their barriers to improving their finances. “Close to a third feel that they are not in a place where they can save money (31 percent),” the report stated.