Fidelity Reveals a Massive Shift With 401(k)s and IRAs - Should Your Plan Change?

Recently, Fidelity published its data and insights on retirement plans from the first quarter of 2026. This data tracks how workers contribute to their retirement plans, including whether their savings rate and contributions increased.

This Fidelity data also provided generation-specific statistics, showing the differences between Millennials and Gen Z in terms of the percentage of people participating in retirement plans and the increase in contributions year-over-year. Here's more information about what the data showed.

Americans are saving for retirement at higher rates

Fidelity's Q1 2026 data showed several positive trends. First and foremost, the total savings rates for 401(k)s and 403(b)s reached 14.4% and 12%, respectively, which is a record high. Additionally, 18% of 401(k) plan holders increased their savings rate, and employers contributed an average contribution of $2,080 to their employees, another record.

There were also record-high contributions to Roth plans, with a 29% increase in IRA contributions from last year. All of this showed a positive trajectory in retirement savings overall, especially in the midst of economic uncertainty.

Many Gen Z workers are using Roth accounts

Gen Z is a leading generation when it comes to IRA growth, according to Fidelity. Their total IRA contributions are up 65% year-over-year, with over one in five Gen Z 401(k) participants using a Roth 401(k). This increase is higher than any other generation, as Millennials showed only a 31% increase, and only one in five Millennials increased their savings rate in the first quarter of 2026.

The pros of contributing to a Roth in your early career

This trend of Gen Z workers using Roth accounts is a positive one, as younger workers tend to be in lower tax brackets and have the longest time horizon before retirement. Because workers contribute to Roth IRAs with after-tax income, it's helpful to have that lower tax bracket, as there is not as much need to use traditional accounts for the purpose of lowering taxable income. Additionally, many people in Gen Z have over 20 years until they're retirement age, which is a good time frame for compound interest to work.

Data shows that most investors don't panic in turbulence

Another positive that Fidelity data showed was that even during economic uncertainty in 2026, only about 5% to 6% of participants changed their asset allocation. Most of the savings rate increases can be attributed to people being enrolled in plans that provide auto increases. However, this data shows that most investors are staying consistent, even if outside factors cause market fluctuations.

What near-retirees need to know about Roth accounts

The Roth trends Fidelity reported show that younger generations are using a Roth strategy, but that may not be right for those nearing retirement. To be fully eligible to withdraw from your Roth tax-free, you must invest for at least five years. So, if you plan to retire soon, it may not be the right strategy for you. However, if you have more than five years before retiring, completing a Roth conversion or a partial Roth conversion may make sense before RMDs kick in. Ask a financial advisor if you're not sure whether or not a Roth account makes sense with your retirement timeline.

How to know whether or not you're on track for retirement

Fidelity recommends that people save at least 15% of their income (before tax) each year towards retirement, with the ultimate goal of saving 10x your income by the time you turn age 67.

Fidelity also provides average 401(k) balance by age data, so you can see whether or not you're on the right track. For example, the average 401(k) balance for those 55 to 59 is $260,800. The average for ages 30 to 34 is $51,700, and the average for ages 40 to 44 is $120,000.

Staying consistent is key to reaching financial goals

Ultimately, Fidelity recommends making consistent contributions towards retirement goals, even during turbulent economic times, as that's what will ultimately fuel compound interest. When your investments compound in retirement accounts, it's especially beneficial, as your earnings are tax-deferred or tax-advantaged, depending on the types of accounts you have. Fidelity reports that the combination of compound interest and tax-advantaged accounts is what truly helps people build wealth.

Bottom line

Fidelity's data from Q1 2026 is encouraging because it shows young workers are investing in Roth accounts and that investors overall are saving at higher rates. It also revealed that many investors are staying consistent, even during moments of economic turbulence. If you want to meet your retirement goals but you're not sure if you're on the right track, contact a financial planner. A financial planner can review your current assets, savings rate, and types of retirement accounts, and help you make a specific plan to reach your goals.