Many Americans who are doing everything they can to keep up with rising costs to support their current lifestyle —and to save and invest as much as possible for retirement — find themselves in an ongoing struggle against the two competing imperatives.
While major financial firms such as Fidelity Investments highlight a wave of renewed confidence among active savers, findings from the National Institute on Retirement Security (NIRS) — a nonprofit organization specializing in pension and retirement research — reveal a far more troubling economic reality for the wider U.S. workforce.
“At a time when Americans are facing a growing affordability crisis, we need to recognize that retirement should be part of that conversation,” said Dan Doonan, NIRS executive director.
On one side of the story, Fidelity clients reached record 401(k) and 403(b) savings rates in the first quarter of 2026. And the firms’s Individual Retirement Account (IRA) holders checked in with record-high contributions (up 29% year-over-year), according to Fidelity Investments’ Q1 2026 retirement analysis.
From a different perspective, many workers still lack access to employer-sponsored retirement plans, hold only modest savings, and increasingly must choose between putting money away for the future and covering essential expenses such as housing or student loan payments.
“Most retirement programs today rely on workers saving voluntarily, with the tension between saving and the cost of buying a home, daycare, and college creating enormous challenges for the middle class,” Doonan wrote.
Although recent legislation has delivered some incremental upgrades to the retirement landscape, significant obstacles persist — from limited access to retirement savings vehicles to ongoing uncertainty surrounding the long‑term stability of Social Security, according to NIRS.
We’ll get to those obstacles that many readers may be experiencing themselves below, but first, let’s review the positive retirement savings findings Fidelity is reporting.
Fidelity’s 401(k), IRA account balances increase year-over-year
Average retirement account balances for Fidelity customers slipped slightly from the previous quarter amid market volatility, but the longer view remains strong, Fidelity reported.
Compared with the first quarter of 2025, the average 401(k) balance rose 11%, 403(b) balances climbed 13%, and IRA balances increased 7%, according to Fidelity’s Q1 2026 retirement analysis.
About 18% of participants boosted their contribution rate — many through automatic escalation — while only 5.7% adjusted their asset mix, down from 6% a year earlier. Employers contributed at record levels as well, with the average quarterly contribution reaching $2,080, surpassing last year’s high of $2,020.
“Retirement savers started the year strong with record-high savings rates and contributions, reflecting the long-term approach they’re taking with retirement preparedness,“ said Sharon Brovelli, president of Workplace Investing at Fidelity Investments.
“While it can be tempting to make changes to retirement savings during market volatility, it is positive to see participants stay the course with their contributions — an approach that will ultimately strengthen outcomes as retirement nears,” she added.
401(k) contribution rates are modest for many workers
Typical contributions to defined‑contribution plans tend to fall in the five‑to‑six‑percent range for employees, while employer contributions generally land just below three percent, NIRS reported.
I put together some calculations on how contribution rates at various percentages of a salary of $62,000 (which is just below the U.S. median of $64,220, according to the Bureau of Labor Statistics) might grow in value over time.
To see how these different strategies play out in the real world, consider an employee earning an annual salary of $62,000 with a standard workplace matching program. In this scenario, the employer matches 100% of the first 3% of the salary contributed, plus 50% of the next 2%, topping out at a maximum employer match of 4%.
Assuming a 7% annual return with annual compounding — and factoring out any future salary raises for simplicity — the math quickly reveals how a small bump in your contribution rate can dramatically alter your retirement timeline.
If you choose a conservative 3% contribution rate, you would personally chip in $1,860 annually, which your employer would match dollar-for-dollar with another $1,860. This creates a total annual savings velocity of $3,720, growing to $21,400 after five years, $51,700 after 10 years, and a solid $148,000 after 20 years.
However, bumping that to a 5% contribution rate allows you to fully maximize the employer match. At 5%, your personal annual contribution rises to $3,100, and your employer chips in their maximum match of $2,480. This pushes your total annual savings to $5,580, accelerating your nest egg to $32,100 in five years, $77,500 in 10 years, and $222,000 after two decades.
For those able to push into double digits, the compounding effect scales beautifully. Stepping up to a 10% contribution rate means putting away $6,200 of your salary annually. Combined with the steady $2,480 employer match, your plan receives $8,680 each year, building a balance of $49,900 after five years, $120,600 after a decade, and $345,400 after 20 years.
Finally, hitting Fidelity’s recommended 15% individual baseline results in a $9,300 personal annual contribution. When paired with the $2,480 corporate match, a total of $11,780 enters the account annually. This aggressive strategy yields $67,700 in just five years, climbs to $163,300 at the 10-year mark, and amasses a powerful $467,900 over 20 years.
It’s clear that contributing to employer-sponsored retirement plans is an important piece of the retirement savings puzzle, but there are key obstacles that need to be overcome.
While Fidelity reports increases in 401(k) and IRA contributions, an uncertain economy has many Americans worried about their retirement savings.
Shutterstock
Retirement preparedness obstacles
Many Americans in the workforce still lack access to employer‑sponsored retirement plans, leaving a significant share without an easy path to save for the future.
“Public sector workers are more likely to have plan sponsorship and participation as compared to private sector workers,” NIRS wrote. “Hispanic workers and those with lower incomes or lower levels of education are significantly less likely to have access or participate.”
Social Security remains a critical pillar of retirement income, but it cannot carry the load on its own. For the typical older American, it provides about half of total income, while payments from defined‑benefit and defined‑contribution plans together make up roughly one‑fifth, according to NIRS.
“Savings levels are low,” NIRS wrote. “Among workers with positive DC savings, median balances were $40,000 in December 2022 (the most recent data available from NIRS). Across all workers, including those with no savings, the median amount saved was just $955.”
“Retirement savings trail other assets,” NIRS added. “Retirement savings account for about one-quarter of financial assets on average for working adults, while home equity represents about one-third.”
“For some workers, the median value of a vehicle exceeds their retirement savings.”