As the stock markets appeared to stabilize as the Middle East conflict entered its fifth day, another bit of good news reached those invested in trading.
Analysis of nearly 25 million 401(k) accounts by Fidelity Investments shows the average balance rose a substantial 11% to $146,100, a significant gain despite market volatility in 2025.
It marks the third consecutive year that the average workplace retirement account managed a double-digit percentage gain.
While this is good news regardless of property status, the boost is particularly helpful to homeowners who will rely on their 401(k) savings to fund their retirement—and stay in their homes into old age.
Retirement savings on the rise
According to Fidelity’s findings, the average balance in a 401(k) across all age groups was $146,000.
The balance, while seemingly low, is significantly higher than the median of $34,400. (The median represents the midpoint of all account balances.)
Additionally, given that others have reported that the average American has less than $1,000 saved for retirement, it’s welcomed news to know that some others are ahead of the game.
Furthermore, the numbers are stronger if you look at the accounts in which people have been saving longer. For instance, for someone who has been saving for at least 15 years, the median balance was $377,700.
The number of accounts with balances of $1 million or more reached 665,000 at the end of last year, a significant jump from 537,000 in 2024.
Fidelity data shows that participants in these million-plus accounts had been saving for an average of 25 years. This sustained saving is likely why the majority of these high-value accounts (60.3%) belong to Gen Xers (born between 1965 and 1980), the generation next approaching retirement.
Default risks for homeowners entering retirement
A solid retirement financial portfolio allows homeowners to plan for the future with ease, especially when it comes to housing.
A sound strategy will account for housing costs comprehensively and considers whether staying in a home or selling to downsize makes the most sense over time.
“Having a 401(k) improves your financial picture, making it possible for one to become and successfully stay a homeowner,” says Katrina Martin, founder and certified tax advisor of Wow Tax & Advisory Service.
Today, Americans with a paid-off mortgage can live off of Social Security alone in only 10 states, according to a Realtor.com® analysis of Social Security benefits by state and the Elder Economic Security Standard Index—a number that is likely to shrink in the coming decades.
And sadly, defaulting on a mortgage or other housing costs has become a real reality for seniors. The percentage of older homeowners carrying mortgage debt is rising, with 41% of those aged 65-79 and 31% of those aged 80 and older having a mortgage or home equity loan/line of credit as of 2023, according to Harvard University’s Joint Center for Housing Study on Housing America’s Older Adults.
Furthermore, the median amount owed by older homeowners with debt has dramatically increased by 400% over the past 33 years, reaching $110,000 for ages 65-79 and $79,000 for age 80+.
Even without a mortgage payment, homeowners face persistent, rising expenses that can strain a fixed income. Costs such as property taxes, insurance premiums, HOA fees, and utilities consistently increase, often at a rate faster than general inflation.
Which is why having a well-funded 401(k) can ensure these expenses can be paid.
How much should you put in your 401(k)
If you are a homeowner and have access to a 401(k) account, ideally you’d max out your contribution every year.
“When you don’t invest the maximum amount, it’s not like those dollars end up in your pocket,” adds Martin. “They’re taxed at every level of your paycheck—federal, state, Social Security, Medicare, and more. So it makes sense to keep the money you worked hard to earn and give it a chance to grow.”
Consider the math. Let’s say you’re 40 and you’ve just bought your first home. This was the average age of a homebuyer last year.
By diligently maxing out a 401(k) starting at age 40, a homeowner can build a substantial nest egg by age 65 that can help cover housing costs.
If we assume a modest 5% annual return, and a strategy that includes maxing out contributions, plus adding increased “catch-up” contributions starting at age 50, you will have roughly $700,000 principal money invested.
With the power of compound interest, that would come out to approximately $1.17 million.
Keep in mind that the IRS usually raises contribution limits every year or two to keep up with inflation. If you continue to “max out” as the ceiling rises, your final number will likely be significantly higher than this estimate.
And while a $1.17 million balance sounds like a total safety net, homeowners should remember that Uncle Sam will take his cut upon withdrawal, as these funds are taxed as income.
Additionally, these savings must often stretch to cover not just the mortgage but the skyrocketing costs of late-in-life healthcare, which can rival a monthly housing payment.
To maintain both your home and a comfortable lifestyle, the best approach is to balance your 401(k) contributions with a liquid emergency fund, an IRA, and other investments.