For many Americans, 401(k) accounts are the best accounts to save for retirement. There are a lot of reasons for that. It's easy to contribute to them because you can just sign up at work, and you may even be signed up automatically. You also get good tax breaks, there's a high contribution limit, there are few choices of investments, so picking them is easy, and your employer may match contributions.
It's good that Americans have this simple account to invest in, because saving in retirement plans is critical to having a secure future. No senior can live on Social Security alone without a major downgrade to their living standard, and putting money into a 401(k) that you can spend as a senior is a good way to supplement these benefits.
Of course, you can also grow your retirement nest egg by investing the money you contribute to your 401(k) in the stock market or in other assets that earn a reasonable rate of return. When you invest, you benefit from compound growth, which helps you achieve your retirement objectives.
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Since a 401(k) can play such a central role in your financial security in retirement, it can be helpful to see how your own balance is shaping up compared to the average -- and especially, to see if your balance is growing as fast. Ideally, you'll want to see your account's value increase by a similar percentage as your peers' accounts or even to outperform your peers when possible.
And there's good news for those who are invested in a 401(k). Balances are going up. So, how did your 401(k)'s performance fare compared to the average account value increase in 2025? Let's take a look.
How much did the typical 401(k) balance increase in 2025?
According to Fidelity, the average 401(k) balance hit $144,400 in the third quarter of 2025. This reflects a:
- 5% increase from Q2 2025
- 9% increase from Q3 2024
- 32% increase from Q3 2020
- 70% increase from Q3 2015
Both stock market gains and consistent contributions helped to drive this increase in average balances. For example, Fidelity reported that the employee contribution rate to 401(k) plans in 2025 was 9.5% of income, while employers contributed 4.7%. So workers were consistently putting money in.
Making regular contributions allows workers to save more over time, while investing in a good mix of stocks and other assets can help workers to benefit from compound growth. This happens when the money that workers invest earns returns, and those returns are reinvested. Compounding allows your account to grow on its own, even if you aren't putting more money into your account.
How can you ensure your balance is increasing?
Ideally, your balance has increased by at least as much as the average, and your account is up at least 9% year over year. If you fell short of this milestone, you may need to make some changes to the amount you are investing, the assets you are investing in, or both.
Of course, the reality is that there is no guarantee your account balance is going to increase every year, even if you are putting in money consistently. You could have a bad year where there are big losses in the stock market. If this happens, you may find that you contributed every month but end the year with the same balance you had at the start -- or even a lower balance due to investment losses. There's nothing to panic over if this happens.
Ideally, though, this won't happen very often, and if it does, you'll keep investing through it and stay the course as long as you've made sound choices in the assets you've put your money into. Over time, if you have made smart investments, your balance should increase in most years -- especially if you are adding money regularly.
The key is to get the right mix of assets based on your age and current risk tolerance so you can give yourself the best chance for your portfolio to grow over time. If you do this, ideally your balance will continue to increase on pace with, or perhaps even faster than, your fellow workers, so you can have the retirement security you deserve.
