401(k) Balances Hit Record Highs, But More Americans Are Raiding Their Retirement Savings

Americans' retirement accounts reached record levels in the second quarter of 2026, helped by strong investment markets and continued contributions. Data from Fidelity Investments released on 3 September showed the average 401(k) balance reached $155,800, up 13% from the same period a year earlier and 10% from the first quarter.

The average IRA balance also climbed to $144,523, a 10% increase from a year earlier. Fidelity said the gains reflected both market performance and continued saving by workers. Mike Shamrell, Fidelity's vice president of thought leadership, said positive market conditions and consistent contributions helped drive the increase.

The figures come as US stocks have continued to perform strongly in 2026. Through 2 September, the Dow Jones Industrial Average was up about 10% for the year, while the S&P 500 and Nasdaq were each up roughly 12%, according to current market reports.

Workers Continue to Save

Fidelity's figures also suggest many workers are maintaining relatively strong contribution rates despite higher household expenses. The average combined employee and employer contribution rate reached 14.4% in the second quarter. Employees contributed an average of 9.6%, while employers added 4.8%.

That figure is close to Fidelity's recommended retirement savings rate of 15%. Fidelity also reported that 81.2% of participants were saving enough to receive their full employer match, while 12.1% increased their contribution rate during the quarter. But the record balances do not tell the whole story.

More Workers Are Borrowing

At the same time, a significant share of Fidelity participants were accessing their retirement savings before retirement. The proportion of participants with an outstanding 401(k) loan reached 19.5% in the second quarter. About 2.8% took out a new loan during the quarter.

Hardship withdrawals also increased. Fidelity reported that 3% of participants took hardship withdrawals, compared with 2.6% a year earlier. Those withdrawals can be an important warning sign because they generally indicate that a participant has an immediate and significant financial need.

Cathy Curtis, a certified financial planner and founder and chief executive of Curtis Financial Planning, has said the increase in hardship withdrawals could point to greater pressure on household finances. However, the Fidelity figures apply to its own retirement-plan participants and should not be interpreted as a measure of all American workers.

The Cost of Tapping Retirement Savings

Taking money from a retirement account can have long-term consequences. Fidelity notes that hardship withdrawals are generally subject to ordinary income tax and may also face a 10% additional tax for people under 59½, unless an exception applies. Unlike a 401(k) loan, a hardship withdrawal generally cannot be repaid to the account.

A 401(k) loan works differently. If the plan permits loans and the required rules are followed, the borrowed amount is generally repaid with interest rather than treated as a taxable distribution. Still, borrowing can reduce the amount of money invested for retirement while the loan is outstanding.

A Mixed Picture for Retirement Savers

The latest numbers therefore present a complicated picture. On one side, rising markets, regular contributions and employer matching are helping retirement balances reach record levels.

On the other, the increase in loans and hardship withdrawals suggests some workers are struggling to meet immediate financial demands without turning to money intended for their later years. The result is a retirement system showing both strength and vulnerability. For workers with growing account balances, the challenge may no longer be simply saving more. It may also be finding ways to protect those savings from short-term financial pressures.