Retirement Account Balances Surged Last Year. Here’s What Made the Difference

Over the past year, retirement savers have watched their balances grow substantially thanks to a booming stock market and increased contributions.

A recent analysis by Fidelity looked at tens of millions of IRA and 401(k) accounts and found the average 401(k) balance had increased more than 11% between Q4 2024 and Q4 2025. The average IRA balance rose 7% during that time.

In 2025, the S&P 500 gained nearly 18% largely due to strong growth in AI stocks such as NVIDIA (NVDA), Meta (META), and Alphabet (GOOGL).

The solid performance of the stock market may have encouraged savers to stash more in their retirement accounts, according to some financial advisors.

“I have seen that once clients experience the benefit of a rising market and the power of compounding interest, they tend to be more motivated to continue to fund their retirement accounts,” wrote Zachary Bachner, a certified financial planner (CFP) at Summit Financial Consulting, in an email.

In Q4 2025, total IRA contributions were up 23% from the previous year. Additionally, the number of IRA accountholders making contributions increased 25%.

While seeing the market reach record highs might spur savers to contribute more to their retirement accounts, Joon Um, a CFP and owner at Secure Tax & Accounting, notes that people shouldn’t just invest more because of strong market performance.

“We try to remind clients not to chase markets. The goal isn’t investing more because the market just went up—it’s building the habit of consistent contributions regardless of market conditions,” wrote Um in an email.

Instead, savers should think about their retirement plan holistically, estimating how much they’ll need to have saved for retirement and the amount they’ll need to contribute over time to reach that goal.

You may consider working with a financial planner who can help you run the numbers, but Fidelity also offers rough guidelines to help you see if you’re on track.

The financial services company recommends that people allocate 15% of their income (including their employer match) to their 401(k) and suggests that people aim to save 10 times their pre-retirement income by age 67 if they want to maintain the same standard of living in retirement.

Fidelity’s calculation assumes that people are eligible for Social Security, collect at full retirement age (67 for those born in 1960 or later), don’t receive a pension, and invest at least 50% of their portfolio, on average, in equities.