Retirement account balances reached unprecedented levels in the second quarter, according to data released Thursday by Fidelity Investments. The average 401(k) balance climbed 13.1% year-over-year to $155,800, while the average individual retirement account balance grew 10% to $144,523, both representing record highs for the respective account types.
Market gains played a significant role in the balance increases, with major indices posting double-digit returns year-to-date. Employee and employer contribution rates remained steady at 14.4%, just below Fidelity’s recommended 15% annual savings benchmark, demonstrating consistent savings behavior among workers.
However, data also revealed troubling signs of financial strain. The share of workers with outstanding 401(k) loans rose to 19.5% in 2026, up from the previous year, with 2.8% of workers taking new loans in the second quarter alone. Hardship withdrawals increased to 3% from 2.6% year-over-year, reflecting growing cash flow pressures among households.
Exerts attributed the uptake in account borrowing and withdrawals to persistent affordability challenges. Rising costs for essentials including groceries, utilities, and housing have strained household budgets despite steady wage growth for some workers. Financial advisors warned that tapping retirement accounts disrupts long-term savings goals and the compounding effect of invested funds, while also potentially establishing a pattern of recurring withdrawals.
Certified financial planners emphasized that account loans and hardship withdrawals should serve as last-resort options when facing immediate financial needs rather than solutions for ongoing budget shortfalls.
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