The percentage is approaching a commonly used rule of thumb, and the average 401(k) plan savings rate just hit a record high.
According to Fidelity’s quarterly review of 25,300 corporate plans with 24.4 million members, the 401(k) savings rate, which includes employee and company contributions, increased to 14.3% in the first quarter of 2025.
According to Mike Shamrell, vice president of thought leadership for Fidelity’s Workplace Investing, “we definitely saw a lot of positive behaviors continue into Q1” despite economic uncertainties.
According to the research, businesses contributed 4.8% to 401(k) plans during the first quarter, while employees postponed a milestone 9.5%. The combined rate of 14.3% is the closest it has ever been near the 15% savings goal suggested by Fidelity.
“Auto-escalations,” which automatically raise savings rates over time, typically in conjunction with pay increases, accounted for two-thirds of the first quarter’s growth in employee deferrals, according to Shamrell.
According to Fidelity, in order to sustain your present standard of living in retirement, you should strive to save at least 15% of your annual pretax income, including corporate deposits. This is predicated on you saving consistently between the ages of 25 and 67.
According to experts, the precise percentage that is appropriate for each person depends on a number of criteria, including their current nest fund, anticipated retirement date, pensions, and other considerations.
Larry Luxenberg, a certified financial planner and the founder of Lexington Avenue Capital Management in New City, New York, stated that there is no “magic rate of savings” because everyone saves and spends differently. “That’s the case before and after retirement.”
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Don’t pass up your employer’s “free money”
Shamrell advises delaying at least enough to get your employer’s full 401(k) matching contribution if you are unable to meet the 15% retirement savings guideline.
Up to a certain amount, the majority of employers will match a portion of your 401(k) deferrals. A “vesting schedule,” which establishes your ownership based on how long you’ve worked for your employer, may also apply to these deposits.
Nevertheless, he stated that “this probably [is] the closest thing a lot of people are going to get to free money in their life.”
48% of businesses on Fidelity’s platform use the most popular 401(k) match formula, which pays 100% for the first 3% of contributions made by employees and 50% for the next 2%.
