Need to Know: What New Federal Reserve Data Reveals About Retirement Savings Across Generations
Updated: 2 days ago
Are Americans making meaningful progress toward retirement security? According to newly released data from the Federal Reserve, retirement savings are growing, but significant differences remain across generations.
Earlier this month, the Federal Reserve released Changes in U.S. Family Finances from 2022 to 2025, drawing on its latest Survey of Consumer Finances. Conducted every three years, the survey provides one of the most comprehensive pictures of American households' finances, including income, assets, debt, and retirement savings.
The latest findings offer some encouraging news: retirement account balances have increased, and participation among younger households has improved over time. However, the data also reveals substantial differences in how much families have saved, while overall participation in retirement plans has changed relatively little.
For employers and retirement plan sponsors, these findings provide valuable insight into how retirement benefits can better support employees throughout their careers.
Retirement Savings Are Growing, but Participation Is Nearly Unchanged
One of the most notable findings is the continued growth in retirement account balances.
Among families holding retirement accounts, the median balance increased from $95,200 in 2022 to $106,000 in 2025, an inflation-adjusted increase of approximately 11%.
Average balances increased even more substantially, growing 23%, from $365,700 to $451,100.
Yet the percentage of American families holding retirement accounts increased only slightly, from 54.3% in 2022 to 54.9% in 2025.
These findings suggest that while families already saving for retirement have generally accumulated more assets, participation has not increased at the same pace. The difference between average and median balances is also important. Averages can be influenced by households with substantial retirement assets, while the median represents the midpoint of account balances.
In other words, rising average balances do not necessarily mean that retirement security is improving equally for all families.
How Retirement Savings Differ by Age
The Federal Reserve's findings become particularly revealing when examining retirement savings across different age groups.
Among families with an individual retirement account (IRA) or defined contribution plan, such as a 401(k) or 403(b), average retirement savings increased between 2022 and 2025 for every age group except those under 35.
Families under age 35 saw average retirement savings decline from $53,800 to $48,400, a decrease of approximately 10%.
Meanwhile, families ages 35–44 experienced an increase of nearly 18%, with average balances rising to $182,400.
For families ages 45–54, average balances rose approximately 21%, reaching $415,800.
Families ages 55–64, those approaching traditional retirement age, experienced an increase of approximately 14%, reaching an average balance of $670,200.
Source: Federal Reserve, 2025 Survey of Consumer Finances, Box 2, Table A. Figures reflect average balances among families holding IRAs or defined contribution plans and are adjusted to 2025 dollars.
These differences highlight several important considerations.
First, younger households continue to face challenges in accumulating retirement savings, even as their participation rates have improved. Notably, although the average balance declined for families under age 35, the Federal Reserve reports that median retirement balances increased across all age groups.
Second, the substantial growth in balances among middle-aged households underscores the importance of consistent savings during the years when employees may be advancing in their careers and preparing for retirement.
Finally, while older households have generally accumulated more retirement assets, a larger account balance does not automatically translate into retirement readiness.
Retirement preparedness depends on numerous factors, including anticipated retirement age, future income needs, healthcare expenses, other financial resources, and lifestyle expectations.
Retirement Plan Participation: Progress Among Younger Households
The survey also offers encouraging findings about participation in retirement plans.
Among families with a reference person age 64 or younger, overall retirement plan participation increased slightly from 64.4% in 2022 to 65.1% in 2025.
This broader measure includes IRAs, defined contribution plans, and traditional defined benefit pension plans.
Participation continues to vary by age. Approximately 66% of families ages 35–44 participated in a retirement plan in 2025, compared with roughly 70% of families ages 45–64.
Perhaps most encouraging is the longer-term trend among younger families.
Participation in IRAs and defined contribution plans among families under age 35 increased from approximately 42% in 2016 to nearly 50% in 2025. This represents meaningful progress in helping younger Americans establish retirement savings earlier in their working lives.
However, the findings also demonstrate that expanding participation remains an important priority.
Even as participation improves among certain groups, many families continue to lack retirement accounts or access to traditional retirement benefits.
For employers, this reinforces the value of programs and communication strategies that make retirement saving accessible, understandable, and relevant to employees at every career stage.
The Increasing Importance of Defined Contribution Plans
The Federal Reserve's findings also illustrate how central defined contribution plans and IRAs have become to retirement savings.
In 2025, participation in these plans ranged from approximately 50% among the youngest families to around 65% among older working-age families.
Traditional defined benefit pension plans remain important, but participation is considerably less widespread, with approximately one-quarter of families covered.
As more Americans rely on individual retirement accounts and employer-sponsored defined contribution plans, employees assume greater responsibility for decisions that can influence their retirement outcomes.
These include determining how much to contribute, understanding investment options, managing risk, and assessing whether their savings are on track to meet future needs. That makes employer-sponsored retirement programs, and the education and communication surrounding them, particularly important.
Providing employees with access to a retirement plan is an essential first step. Helping them understand and make effective use of that benefit is equally important.
What the Findings Mean for Employers
The latest Federal Reserve data offers an opportunity for employers to evaluate whether their retirement benefits strategies are meeting employees' needs.
Different generations of employees face different financial circumstances and priorities.
Early-career employees may be balancing student loan payments, housing costs, and the challenge of establishing savings habits.
Mid-career employees may be navigating competing financial obligations, including family expenses, education costs, and long-term financial planning.
Employees approaching retirement may be increasingly focused on determining whether their accumulated savings can support the retirement they envision.
These differences underscore the importance of retirement benefits strategies that support employees at every stage of their financial lives.
Employers may benefit from considering several questions:
Participation: Are employees taking full advantage of available retirement savings opportunities?
Plan design: Could features such as automatic enrollment, automatic contribution increases, or employer matching contributions help encourage consistent savings?
Financial education: Do employees understand their retirement benefits and how to use them effectively?
Retirement readiness: Are employees receiving the information and resources they need to assess their progress toward retirement?
Communication: Are retirement benefits explained clearly and consistently, with information that reflects employees' different needs and circumstances?
There is no single approach that works for every organization or workforce. However, thoughtful plan design, ongoing education, and relevant communication can help employees make more informed decisions and better utilize their retirement benefits.
Looking Ahead: From Retirement Savings to Retirement Readiness
The Federal Reserve's 2025 Survey of Consumer Finances offers an important snapshot of how American households are preparing for retirement.
Retirement balances have generally grown, and younger families have made progress in participation. Yet substantial differences in accumulated savings remain, and overall retirement plan participation has increased only modestly.
For employers, the takeaway is clear: An effective retirement benefits strategy is about more than offering a plan. It is about creating opportunities for employees to build financial security throughout their working lives.
By regularly evaluating retirement plan design, participation, education, and communication, employers can identify opportunities to strengthen their programs and support better long-term outcomes.
Explore the Full Federal Reserve Report
The 2025 Survey of Consumer Finances provides additional insights into household income, wealth, assets, debt, and retirement plan participation across the United States.
At Robin S. Weingast & Associates, Inc., we help employers evaluate their retirement and employee benefits strategies, identify opportunities to strengthen plan outcomes, and develop solutions that reflect the evolving needs of today's workforce.
Contact us today to discuss how your retirement benefits strategy can better support employees at every stage of their careers.
Comments