There's a new record number of 401(k) millionaires - and the Iran conflict will test their discipline

By Jessica Hall

The same financial habits that pushed the number of 401(k) millionaires to new highs may help retirement savers through the current global uncertainty

Fidelity and Vanguard suggest clients think long term when looking at retirements savings.

Strong savings habits and a focus on the long term helped push the number of 401(k) millionaires to a new high at Fidelity and drove double-digit balance increases at Vanguard - discipline that could help in times of market turbulence and geopolitical tension.

The number of 401(k) millionaires rose to 665,000 in the fourth quarter, up slightly from 654,000 in the third quarter, according to Fidelity Investments, which holds $17.5 trillion in assets under administration.

These retirement millionaires have account-holding tenures of roughly 25 years or more, making their long-term focus a model for other investors, Fidelity said. While the majority of millionaires were older workers who had been saving for a long time, a total of 4% of the retirement-account millionaires were millennials, who are those born between 1981 and 1996.

A third straight year of double-digit annual balance increases came, in part, due to strong growth in the markets, Fidelity said. Despite market swings in the spring of 2025 amid tariff announcements, the S&P 500 SPX ended the year with a gain of 16%, while international equities surged 32% and the U.S. bond market rose 7%.

In recent days, however, global markets have weakened in the wake of the weekend attack on Iran by Israel and the U.S.

"Times like this can be concerning," Mike Shamrell, vice president of thought leadership at Fidelity, told MarketWatch. "In general, we encourage people not to make changes to their long-term strategies to react to short-term issues."

During the fourth quarter, Fidelity's 401(k) average balances rose to $146,400, up more than 11% from the year-ago fourth quarter. The median balance was $34,400. The average 403(b) account rose 13% to $133,500. The median balance was $33,270.

IRA balances increased 7% to an average of $137,095. The median balance was $10,476, Fidelity said.

Meanwhile, in a preview of its "How America Saves 2026" report, low-cost investing giant Vanguard said average participant account balances increased by 13% from year-end 2024, and reached an all-time high of $167,970 as of year-end 2025. The median balance was $44,115, a 16% increase since year-end 2024.

The total savings rate for 401(k)s held steady for the third year in a row at 14.2%, reflecting a 9.5% savings rate for employees, and an employer contribution of 4.7%, Fidelity said. Vanguard did not release a total savings rate.

Gen X is paying attention to retirement

In a bright spot, Generation-X workers are maintaining an average total savings rate of 15.4% - above Fidelity's suggested goal of 15% - marking a promising trend as this generation approaches retirement age, Fidelity said. Gen X are those born between 1965 and 1980, and are those in "pre-tirement," or next in line to retire.

"We're seeing positive behaviors among Gen-X workers, many of whom are taking advantage of catch-up contributions," Shamrell said. In 2026, the standard 401(k) and 403(b) catch-up contribution limit for individuals aged 50 and older will increase to $8,000. That's in addition to the base contribution limit of $24,500 for 2026.

Vanguard also saw strong uptake of catch-up contributions. For individuals aged 60 to 63 years old, they were allowed to invest up to $11,250 in "super catch-up contributions." When offered this option, 13% of eligible participants contributed above the standard $7,500 catch-up limit.

Automation tools helped

Vanguard said 14% of participants increased their retirement savings rate or payroll deferral percentage in 2025, while 8% decreased it. People are benefiting from tools such as auto-escalation built into some workplace retirement plans. Vanguard said a total of 31% of participants had their deferral percentage increased from an annual auto-escalation, which led to 45% of participants increasing their savings.

Most participants are keeping it simple when it comes to investing, Vanguard found: Nearly two of every three dollars contributed were invested in target-date funds, which automatically adjusts asset allocation as an investor approaches a specific target retirement year.

Vanguard said 13% of participants had a loan outstanding at year-end 2025, in line with 2024.

Overall, hardship withdrawal activity increased modestly in 2025, with 6% of participants initiating a hardship withdrawal, up from 5% in 2024, Vanguard said.

The slight increase in hardship withdrawals may reflect regulatory changes that now make it easier to request a hardship withdrawal, Vanguard said. It also reflects that people have a powerful need for emergency savings and many competing financial pressures from everyday expenses to retirement savings to saving for kids' college funds. Hardship withdrawals may serve as a safety net that may not otherwise have been available without being automatically enrolled in a retirement-savings plan, Vanguard said.

-Jessica Hall

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03-07-26 1440ET