Americans are feeling more confident about their finances and retirement read­iness, according to new data on 401(k) and health savings account (HSA) balances.

Supported by greater savings rates and pos­itive market performance, average account bal­ances grew significantly from 2023 to 2024.

Big Jump in Average 401(k) Balances

The average 401(k) account balance at the end of 2024 was approximately $100,300, 16% high­er than the average $86,000 balance at the end of 2023, an analysis from Bank of America found.

Driving the growth was an increase in the average 401(k) contribution rate, which reached 6.6% in 2024. Significantly, 21% of participants bumped up their contribution rate in the last quar­ter of 2024, compared to just 9.7% doing so in the third quarter. The trend was led by Millennials.

Fewer participants also borrowed against their 401(k) savings in the fourth quarter of 2024. Only 2.2% did so, down from 2.5% in the third quarter. This suggests participants increasingly saw their retirement funds as untouchable sav­ings versus a source of short-term borrowing.

HSAs Also See Big Balance Boost

Like 401(k)s, health savings accounts (HSAs) saw robust growth. The average HSA balance at the end of 2024 was $5,000, up 14% from the av­erage $4,400 balance at year-end 2023.

In the fourth quarter of 2024, Generation X employees contributed the most on average to their HSAs, nearly $2,000. Millennials were most likely to have invested their HSA funds for growth potential rather than leaving contri­butions in cash.

All told, just 14% of HSA account hold­ers are investing their funds. That means many employees aren’t capitalizing on the full bene­fits and growth opportunities HSAs offer.

Signs of Greater Retirement Confidence

While positive market returns over 2024 certainly helped drive account growth, the marked increase in participant contribution rates also reflects greater retirement readiness confidence. With life expectancies increas­ing, health care costs rising, and Social Securi­ty facing solvency issues, experts have warned that employees need to ramp up their own re­tirement savings efforts.

The new data from Bank of America sug­gests the warnings are hitting home. More em­ployees appear to be feeling confident in their ability to consistently save for retirement.

However, financial stress remains a sig­nificant burden for the broader workforce. In 2024 surveys, workers still rated their financial well-being concerns at 6.3 out of 10. Separate polls found 43% say inflation has had an ex­treme or significant impact on their finances.

So while the growth in average 401(k) and HSA balances is an encouraging milestone, many employees still face money worries that could derail their retirement saving and security.

What Employers Can Do in 2025

With signs retirement confidence and sav­ings rates are turning a corner, experts say em­ployers should double down on financial well­ness and retirement education initiatives. Sug­gested moves include:

• Spotlight HSAs: Boost employee under­standing of HSAs through increased commu­nications and education around their benefits and growth potential. Encourage more account holders to invest their balances.
• Consider auto-features: Auto-enrollment and auto-escalation in 401(k)s can simplify sav­ing and help participants steadily increase contributions.
• Add matching funds: A 401(k) match will encourage participation and accelerate retirement savings.

Offer financial wellness help: Online tools, calculators, financial scores, and counseling can all promote better financial behaviors.

The Need for Ongoing Diligence

While the 2024 data reflect rising balances and savings rates, experts caution that consis­tent retirement saving takes ongoing diligence from both employers and employees alike.

As life expectancies stretch longer, health care costs continue outpacing inflation, and fixed monthly income from Social Security remains limited, retirement security is an in­creasing personal responsibility.

With just 40% of workers in 2023 feeling confident they’ll have enough savings for a comfortable retirement, there remains substan­tial room for improvement.

Employees of all ages should reassess their retirement savings strategy and trajectory an­nually. They should set clear goals for 401(k) contribution rates and total balances to achieve key milestones.

Meanwhile, employers should promote re­tirement readiness year-round through communications campaigns, educational seminars, tailored web tools, and more.

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Copyright © 2025 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.