Retirement savers have faced plenty of white knuckle days in 2025 where stock market conditions — and on-again, pause-again tariffs — put everyone’s nerves on edge.
Amazingly, no matter how awful things felt some days, many have not seen a double-digit fallout in their 401(k) savings in the first quarter, according to the latest data from Fidelity Investments.
Average 401(k) retirement account balances fell 3% from late last year through the first three months this year to $127,100. Savers still saw a 1% gain in balances from the first quarter a year ago, according to Fidelity.
It wasn’t as easy to become a millionaire during the first quarter’s rough ride. Fidelity reported that 512,000 savers were 401(k)-created millionaires in the first quarter, down about 4.6% from 537,000 in the fourth quarter of 2024. These savers had at least $1 million in their retirement account.
The third quarter of last year was when Fidelity saw a record number of 401(k) millionaires created, at 544,000.
Fidelity’s 401(k) data is based on 25,300 defined contribution plans at various companies across the country. The plans covered 24.4 million participants as of March 31.
Pictured is a piggy bank with cash.
What a difference a few months of economic uncertainty makes.
We had a good, set-it-and-forget-it kind of a year in 2024. At the end of last year, retirement savers saw average 401(k) balances go up 11% from the start of the year, according to Fidelity’s data.
Even seeing a 3% decline in the first quarter this year could be unsettling for some savers, considering that 401(k) savers only saw a slight 0.5% dip on average from the third quarter through the fourth quarter last year.
You would have to go back about two years to the third quarter of 2023 to see a drop of 4% in average retirement savings from the second quarter that year.
So far, it has been one incredibly weird kind of a year with some miserable declines and some miraculous rebounds.
Fortunately, many investors are no longer dealing with the 15% year-to-date decline that we saw as of April 8 for the Standard & Poor’s 500 index.
“If one ‘took a nap’ on Jan. 19 and didn’t wake up until May 31, they would have conjectured that the markets had been relatively calm,” said Robert Bilkie, CEO of Sigma Investment Counselors in Northville.
The S&P 500 index was up 0.92% year to date through June 2 when the S&P 500 closed at 5,935.94 points. The total year-to-date return — including dividends — was 1.49% through the market close June 2. The total return was 25.02% in 2023 and up 26.29% in 2025.
Most diversified common stock accounts held by savers are up modestly for the year, Bilkie noted.
The key word here is diversified. Some investors continue to face deep losses in 2025, particularly if they invested a large chunk of their money in one stock or industry.
General Motors stock, for example, was down 10.47% year to date from its close of $53.27 a share on Dec. 31, 2024, through the June 2 close of $47.69 a share.
Stellantis was down 25% from its close of $13.05 a share on Dec. 31 through its close on June 2 of $9.78 a share.
Ford stock is up 0.8% from year-end 2024 when the stock price closed at $9.90 a share through June 2 when the stock closed at $9.98 a share.
“The worst losses were centered around companies that were impacted by the uncertainty surrounding tariffs and trade war,” said Sam Huszczo, a chartered financial analyst in Lathrup Village.
“Think Tesla or Nike, who are very dependent on a confident consumer and relying extensively on international markets, manufacturing, and supply chains.”
Tesla stock was down 15% year-to-date through June 2; Nike was down 18.6% during that same time before dividends.
This year, many investors also sold stock in some companies as they took profits from the high-flying stocks of 2024, like technology stocks, Huszczo said.
“What goes up fast, also comes down fast. As the market darlings of last year turned into this year’s cautionary tales.”
We continue to witness unpredictability, and a sense that things are different from economic shifts in the past.
Unlike the 2008-09 meltdown, we’ve not seen stock prices just keep continuously falling so far this year. Instead, we’ve seen some ungodly volatility. We’ve had days where the Dow Jones Industrial Average lost 2,231.07 points or 5.5% on April 4 and suddenly gained 2,963 points or 7.87% on April 9.
Huszczo said many individual investors who are saving for retirement or other reasons tended not to panic sell, and often bought into the dip. Some “charged into the dip like it was Black Friday.”
On “Liberation Day” on April 2, Trump put tariffs on every nation. On April 9, though, Trump paused his “Liberation Day” tariffs for 90 days until July 8 after Wall Street revolted over the widespread tariffs, which were expected to drive up prices and drive down economic growth in the United States.
Now, the Trump administration wants countries to provide their best offer on trade negotiations by June 4, according to a Reuters report June 2.
Michael Shamrell, Fidelity’s vice president of thought leadership for workplace investing, said Fidelity recommends that maintaining a long-term plan is often the most appropriate strategy when investors face an uptick of volatility in the market, as has been the situation in 2025.
“Factors like rapid policy changes, political uncertainty, and the impact of tariffs, along with the speed and magnitude of changes, contribute to a sense of heightened instability,” the Fidelity report stated.
Savers still want to continue to contribute at least enough in savings to 401(k) plans, Shamrell said, to receive their company’s matching contributions.
“It will not only put you in a good spot when markets recover but also allow you to continue to take advantage of any matching contributions your employer might offer,” Shamrell said.
Shamrell told me in a phone interview that it’s encouraging that many people continued to stay on course in early 2025 and not make changes with their 401(k) savings — even with all the dramatic swings on Wall Street.
The total 401(k) savings rate — adding both employee savings and employer contributions — increased to a record 14.3% in the first quarter, according to Fidelity data.
The record-high 401(k) total savings rate, according to Fidelity, was driven by an unprecedented employee contribution rate of 9.5%, plus an employer match of 4.8% — the highest employer contribution rate recorded to date.
At a 14.3% total retirement savings rate, Shamrell said, more people are moving closer to a recommended 401(k) savings rate of 15%.
Fidelity recommends that employees aim to save at least 15% of their pretax income each year, including matching money from your employer, to help ensure that they have enough money in retirement to maintain their current lifestyle.
Shamrell said the first quarter results likely benefited as some companies increased their 401(k) contributions into the plans based on profit-sharing arrangements.
Beginning in 2025, the federal law called the Secure 2.0 Act also required companies with new 401(k) plans and 403(b) plans to automatically enroll eligible employees at a minimum contribution rate of 3%, but no more than 10%. The employee may opt out.
Also under Secure 2.0, those enrolled in new 401(k) plans would automatically see their contributions out of their paychecks go up by 1% or so every year until they reached 10%. The employee could opt out or change the contribution rate. Both auto enrollment and auto escalation rules that began in 2025 apply to new plans established on or after Dec. 29, 2022.
Employers are not required to offer 401(k) plans under Secure 2.0.
Other retirement trends, according to Fidelity data:
Most individuals continued to contribute to their retirement savings accounts and continued to invest in the stock market. Of the 6% individuals that made a change to their allocation, 28.2% of those participants moved some of their savings into more conservative investments.
Only 0.9% of 401(k) participants stopped contributing at all to a 401(k) plan in the first quarter.
More than 66% of 401(k) participants used a target date fund or managed account, which offers a mix of assets. Target date funds provide an asset mix that reflects an individual’s age and their expected or targeted year of retirement. Managed accounts are more personalized and also consider an individual’s goals and risk tolerance.
Overall, 401(k) savers and investors have been resilient, according to Melissa Joy, president of Pearl Planning, a wealth adviser in Dexter.
Many investors who maintained their overall allocation saw their portfolios start to return to positive territory by early May, she said.
“We were seeing accounts just north of positive — up 2% to 4% at the end of the first quarter. Then, liberation day made everything topsy turvy in early April with deep but in many cases temporary drawdowns,” she said.
She acknowledged, though, that it is becoming difficult for some investors to separate their political outlook from their investment perspective.
“But, all-in-all, our clients maintained their allocations and investment strategy through the volatility we’ve seen so far this year,” Joy said.
Uncertainty, of course, remains among the most popular words used by CEOs and other business leaders in 2025. We don’t know what’s next for Wall Street, trade talks, or the overall economy — and that isn’t making it easy to save for retirement in 2025.
Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X @tompor.
