As 401(k) Savings Reach Record Level, Are You Making the Most of Yours?

The average American is saving more for retirement than ever before, but a higher contribution rate alone doesn’t guarantee long-term security. How you manage your 401(k), across jobs and over time, can make a critical difference in the quality of your retirement.

According to Fidelity’s Q1 2025 analysis of over 25,000 corporate plans, the average 401(k) savings rate—including employee and employer contributions—has hit a record high of 14.3%. That puts many workers within striking distance of the widely recommended 15% annual savings benchmark that financial planners often suggest.

What’s Behind the Jump in Savings?

The data shows encouraging trends:

Employees deferred an average of 9.5% of their pay into their 401(k) plans.
Employers chipped in another 4.8% on average, bringing the total to 14.3%.
Much of the increase came from automatic escalation features, which gradually boost employee contribution rates over time, often in sync with raises or annual reviews.

This is great news for long-term retirement readiness, especially during a period of economic uncertainty. More Americans are sticking to smart habits, despite inflation, market volatility, and recession fears.

But the numbers only tell part of the story.

The 15% Rule and Why It’s Just a Starting Point

Financial professionals often cite 15% of pre-tax income (including employer contributions) as a target savings rate to maintain your current lifestyle in retirement. That’s based on the assumption that you’ll save consistently from age 25 to age 67.

But in reality, the “right” savings rate varies widely depending on:

When you plan to retire
How much you’ve already saved
Whether you’ll have pensions or other income streams
Your spending patterns now and in retirement
The performance and fees inside your investment options

For some clients, 15% may be more than enough. For others, especially those starting later or eyeing early retirement, it may fall short. That’s where strategic 401(k) planning comes in.

Are You Leaving Free Money on the Table?

Even if you’re not ready to contribute 15%, there’s one line you should always try to cross: your employer’s full 401(k) match.

The most common formula on Fidelity’s platform (used by nearly half of employers) is:

100% match on the first 3% you contribute
50% match on the next 2%

That means if you contribute 5%, your company puts in an additional 4%, a substantial boost to your long-term savings. Failing to contribute enough to get the full match is essentially turning down part of your compensation and leaving money on the table.

How Hanover Helps You Maximize Every 401(k)

At Hanover, we go far beyond generic savings advice. We offer 401(k) aggregation and oversight services that help you make the most of your workplace retirement plans—whether you’re still contributing, changing jobs, or preparing to draw down in retirement.

Here’s how we add value:

Aggregate and monitor multiple 401(k)s from previous employers so you don’t lose track—or leave money sitting in outdated plans.
Align your 401(k) strategy with your overall portfolio, so you’re not duplicating risk or missing diversification opportunities.
Analyze your plan’s investment menu to identify smart options and avoid high-cost funds.
Coordinate rollovers when appropriate to simplify and strengthen your long-term retirement structure.
Incorporate your 401(k) into your tax plan, helping you optimize Roth versus pre-tax contributions and manage future distributions strategically.

The Bottom Line

It’s encouraging that Americans are saving more for retirement than ever, but contribution rates are just one piece of the puzzle. If your 401(k) is out of alignment with your broader financial goals, you may not be getting the full value from your efforts.

If you’re unsure how well your retirement savings are working together—or if you have multiple accounts from past jobs—we can help. Hanover offers personalized, planning-driven guidance to ensure every dollar you save is working as hard as you are.

Want to find out if your 401(k) strategy is on track?
Schedule a Retirement Savings Review today.