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401(k) Contributions Hit a Record, Even as Balances Fall
Plus, the latest in market news.
Happy Sunday, and welcome to Benzinga’s financial advisor newsletter.
Today we're discussing retirement savings. Retirement account balances dipped in early 2025 due to market volatility, but the drop hasn’t shaken most savers. Savings rates remain strong, with 401(k) contributions hitting a record average of 14.3% this quarter.
Plus, a look back at the last week of market activity.
Table of Contents
INDUSTRY CHATTER
If your retirement account took a small hit this past quarter, you’re not alone — but you may not need to worry. Market ups and downs have led to a dip in retirement balances for many Americans, but overall savings habits remain strong.
Fidelity’s latest quarterly retirement report — based on data from over 50 million retirement accounts — shows that average balances in 401(k), IRA, and 403(b) accounts declined slightly in Q1 2025. For example, the average 401(k) balance dropped to around $122,000, down from about $127,000 at the end of last year. The same trend showed up in IRAs and 403(b)s as well. The cause? Mostly short-term market volatility.
The encouraging news is that people are still saving at solid rates. In fact, the average 401(k) savings rate hit a new high of 14.3%, and 403(b) savers held steady at 11.8%. That tells us that, despite the market noise, most people are staying focused on their long-term goals and continuing to contribute to their retirement plans.
This kind of consistency matters. Retirement planning is a long game, and these dips are a normal part of the process. Even with this quarter’s decline, account balances remain significantly higher than they were five years ago — a reminder that riding out the market’s ups and downs can pay off over time.
So what’s the takeaway? Yes, balances were down a bit this quarter, but the fundamentals are strong. Savers are still putting money away, and they’re doing so at record levels. If you’re sticking to your plan, making regular contributions, and staying invested, you’re likely in good shape.
In short, the market may wobble — but retirement savers aren’t panicking. They’re playing the long game, and that’s often the smartest move.
WEEKLY MARKET RECAP
Despite fears of a sharp slowdown in the labor market, the official nonfarm payrolls report for May showed stronger-than-expected job growth, underscoring the resilience of the U.S. economy amid macroeconomic uncertainties.
The economy added 139,000 nonfarm payrolls in May, beating expectations of 130,000 yet cooling from the previous 147,000. Wage growth also exceeded expectations, with average hourly earnings rising 0.4% month over month and 3.9% year over year. The unemployment rate remained steady at 4.2%.
President Donald Trump celebrated the strong May jobs report, calling the figures "great numbers," while renewing his public pressure on Fed Chair Jerome Powell, urging him to lower interest rates.
According to Trump, borrowing costs should be "much lower" as they are costing the U.S. economy "a fortune," suggesting the need to refinance maturing debt.
His remarks came after the Congressional Budget Office released updated estimates for Trump's sweeping tax bill, which is projected to add $2.4 trillion to the federal deficit over the next decade.
Political Spat Between Trump And Musk Hits Tesla Stock
A clash between Elon Musk and Trump erupted on Thursday after the tech billionaire publicly slammed the tax bill, claiming it was pushed through Congress too fast and never shared with him during his brief tenure as head of the Department of Government Efficiency.
Musk advocated for a leaner federal budget and accused the legislation of reckless spending.
Trump claimed Musk had gone crazy after losing access to government electric vehicle mandates. The president also floated the idea of scrapping all government contracts with Musk's companies, including SpaceX and Starlink, as a cost-saving measure for the budget.
Tensions reached a boiling point when Musk posted: "Time to drop the really big bomb: Trump is in the Epstein files. That is the real reason they have not been made public," yet offering no evidence to support the claim.
The feud sent shockwaves through markets, triggering Tesla Inc.‘s worst trading session of the year. Shares tumbled 14% on Thursday, erasing $152 billion in market value and capping a brutal week of double-digit losses.
On Friday, the S&P 500 – tracked by the SPDR S&P 500 ETF Trust – closed at 6,000 points, gaining 1.5% for the week.
THE WEEK AHEAD
Economic Data
Monday: US wholesale inventories and consumer inflation expectations
Tuesday: US weekly crude oil stock and 3-year note auction
Wednesday: US CPI and monthly federal budget
Thursday: US initial jobless claims and producer price index
Friday: US consumer sentiment, CAD wholesale sales
Earnings
Click here for the full calendar of economic data and earnings reports.
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