A lot of people unfortunately enter retirement with very little money saved and wind up reliant on Social Security to make ends meet. And while there’s nothing wrong with having those benefits constitute a portion of your retirement income, they shouldn’t represent all or most of it.
Rather, it’s important to save well for retirement to ensure that you’re able to cover your expenses without constant worry. And in that regard, an IRA is a retirement account worth utilizing to the fullest.
Image source: Getty Images.
The nice thing about IRAs is that anyone with earned income can fund one. With a 401(k) plan, you may be out of luck if the company you work for doesn’t offer one.
You may be curious to know how your IRA balance compares to the average today. To that end, Fidelity has fresh data on IRA balances. But you may not like what you see.
IRA balances are down
As of the first quarter of 2025, the average IRA balance was $121,983, says Fidelity. That’s a 4% decline from the fourth quarter of 2024.
That said, it’s also a 23% increase from the first quarter of 2020. So what this tells us that is that a drop in IRA balances earlier this year is most likely attributable to stock market volatility.
What if you’re not happy with your IRA balance?
If your IRA balance is nowhere close to $121,983, you may be working yourself into a panic. Don’t.
First, realize that $121,983 is the average IRA balance across all age groups. If you’re 32 years old, you can’t compare yourself to an IRA saver who’s 59. They’ve had so many more years to contribute to their savings and allow their money to grow.
Growing an IRA can also be trickier than doing so in a 401(k). For one thing, 401(k)s are funded via payroll deductions. With an IRA, you have to actively send money into your account each month, unless you’re able to set up an automatic transfer. That could make it harder to stay consistent.
Also, 401(k)s commonly come with employer matches. In an IRA, there’s no workplace match to give your savings a boost.
Still, there are steps you can take to grow your IRA balance if you’re not happy with where it stands today.
First, make sure you’re invested appropriately for your age. If you’re a few decades away from retirement, it’s a good idea to have the bulk of your IRA in stocks.
And the nice thing about IRAs is that they allow you to hold shares of individual companies, so you can truly customize your portfolio as you see fit. With a 401(k), you’re commonly limited to different funds, which means you may get less of a say over how your money is invested.
Another way to boost your IRA is to evaluate your spending and see if there’s room to trim your costs. There may not be a very obvious solution until you comb through your bank and credit card statements from recent months and look closely at each line item. If you can scrounge up an extra $50 a month for your IRA, it’ll only help your balance grow even more over time. You can also look to the gig economy for extra income and use that money to fund your IRA.
And finally, see if you can automate contributions. Many accounts let you do this so that funds land in your IRA off the bat once you get paid, thereby removing the temptation to spend the money you’re supposed to be saving.
Whether your IRA balance today is higher than, lower than, or comparable to the average reported by Fidelity, it never hurts to try to do better. But remember, too, that IRA balances can move based on market conditions. So don’t get too worked up if you see that your IRA balance is a bit lower than it was at the start of the year.
