Over the last few months, fluctuations in the financial markets have impacted many retirement savers across the United States. Recent data highlights vital shifts in both 401(k) and individual retirement account (IRA) balances.
According to Fidelity Investments, a leading provider of retirement plans, the average 401(k) balance saw a decrease of 3% in the first quarter of 2025, bringing it down to $127,100. Similarly, the average IRA balance dropped by 4%, landing at $121,983. Despite these declines, both 401(k) and IRA balances show an increase compared to the previous year, indicating a long-term positive trend.
Despite recent market turbulence, most retirement savers are continuing their contributions. Fidelity reported that the average contribution rate for 401(k) accounts, accounting for both employee and employer contributions, rose to 14.3%. This figure is only slightly below Fidelity's recommended savings rate of 15%.
Sharon Brovelli, President of Workplace Investing at Fidelity, expressed optimism regarding savers' ongoing efforts. She stated, “While the first quarter of 2025 presented challenges, it’s heartening to see individuals maintaining a long-term savings mindset.” Such an approach will better equip savers to navigate market instability.
The U.S. financial markets have faced increased pressure following the announcement of specific tariffs by the White House in early April. As a result of ongoing trade tensions, particularly with the European Union and China, investors have experienced some of the most challenging trading days since the early stages of the COVID-19 pandemic.
However, recent trends indicate a recovery. By mid-week, the Dow Jones Industrial Average had stabilized year-to-date, while both the Nasdaq Composite and S&P 500 indexes had each increased by about 1% in 2025.
Mike Shamrell, a Vice President at Fidelity, emphasized the significance of maintaining a long-term investment strategy. He advised investors, especially those approaching retirement, to view their savings with a time horizon of 10 to 20 years. Focusing on long-term goals rather than short-term fluctuations is essential.
Gil Baumgarten, CEO and founder of Segment Wealth Management, reinforced this perspective by cautioning against attempts to time the market. “Intervening often leads to missed opportunities,” he explained. “Many individuals concentrate on short-term volatility, losing sight of the long-range advantages associated with investing.”
Research from Wells Fargo highlights an interesting trend: the most significant trading days for the S&P 500, in terms of percentage gains, have occurred during economic recessions, often closely following the market’s poorest performance days. This pattern underscores the importance of remaining invested, even during downturns.
While the stock market can exhibit considerable fluctuations, historical data reveals that the S&P 500 has delivered an average annualized return exceeding 10% over the past several decades. Since 1950, this index has yielded positive returns approximately 77% of the time, further supporting the case for long-term equity investments.
In light of these circumstances, financial experts suggest that investors remain focused on the bigger picture. Baumgarten summarized it best: “The goal should be to capitalize on the general upward trajectory of the equity market over time.”
By understanding these trends and applying a disciplined investment approach, retirement savers can navigate the complexities of the financial landscape with greater confidence and resilience.
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