Gen Z supersavers help propel IRA contributions to record highs

By Jessica Hall

There is still time to make IRA contributions for 2025 - the deadline is April 15

Fidelity said 34% of IRA accounts owned by Gen Z members saw a contribution this year.

Contributions to individual retirement accounts have hit a record high, driven by enthusiasm for Roth contributions and increased awareness about the need for retirement security, Fidelity Investments said.

Americans have until the tax deadline on April 15 to make contributions to their IRA accounts for 2025. The maximum combined traditional IRA deduction or Roth contribution is $7,000 in 2025, or $8,000 for people age 50 or older.

"Tax season is peak engagement time," Rita Assaf, vice president of retirement offerings at Fidelity, told MarketWatch. "It spurs people to think about their overall goals."

As of March 20, 14.8% of Fidelity IRAs have seen a contribution this year, up about 2 percentage points from the same period last year.

January marked a record for the highest monthly contributions to IRAs in terms of both the amount contributed and the number of people making contributions, Fidelity said.

Overall, Fidelity IRA contributions are up 30% from the same period last year, the company said. The average IRA contribution this year was $1,600. The median contribution was $700.

Investors haven't yet been spooked by geopolitical events when it comes to making contributions to retirement accounts, Fidelity said.

On Feb. 28, the U.S. and Israel launched airstrikes against Iran, killing Iranian Supreme Leader Ali Khamenei. Since then, oil prices have jumped, average gas prices have topped $4 a gallon and the S&P 500 SPX has fallen about 4%.

"I don't think we've seen the impact of the macro events that are happening," Assaf said.

But even before the start of the conflict in Iran, American workers were struggling with high costs for basics, such as housing, healthcare and food. The need to save up enough for retirement is also weighing on many workers, with pensions now rare, not all employers offering 401(k) or similar retirement-investment plans, and Social Security facing major issues funding benefits if Congress doesn't act.

One driver of IRA growth has been interest in Roth IRAs, which allows after-tax contributions that grow tax-free, with tax-free withdrawals in retirement.

"There's been an acceleration of Roths as more people are aware of Roths," Assaf said. "There's definitely a shift in awareness. People are saying, 'I can lock in potential tax-free growth,' and they're taking action. Largely, we continue to see awareness at a younger age."

Read: How to make Roth IRAs work for you at any age

Newly funded Roth IRAs are up 45% from a year ago, Fidelity said. Fidelity has 18.9 million total IRA accounts, including both traditional and Roth accounts.

Fidelity said it has seen strong participation by Generation Z, born between 1997 and 2012. That generation, the oldest of whom are now 29, has been saving for retirement earlier and more aggressively than other generations did at the same age.

According to 2024 research from the Transamerica Center for Retirement Studies, baby boomers - born between 1946 and 1964 - started saving for retirement at a median age of 35.

Read: Progress, not perfection: Gen Z has made some extraordinary financial moves but still needs help

Half of Gen Z investors are driven to invest by FOMO - the fear of missing out - according to the CFA Institute and Finra Foundation. And a total of 48% of Gen Z members said they use social media as an information source, rather than friends, family or financial advisers.

"There is broader awareness and accessible information available. Gen Z has seen other generations struggling. They are acting on this awareness," Assaf said.

Fidelity said 34% of IRA accounts owned by Gen Z had a contribution between Jan. 1 and March 20, compared with 20% of accounts owned by millennials and 13% for Generation X. Millennials are those born between 1981 and 1996, while Gen X are those born between 1965 and 1980.

-Jessica Hall

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04-07-26 1059ET