401(k) Balances Hit a Record High While More Americans Raid Them

A headline about record-high retirement balances sounds like unambiguous good news, the kind of statistic that makes people feel like their financial plan is finally working. The same report that produced that number also flagged something less reassuring. A growing share of the very people watching their 401(k) balances climb are also borrowing from those same accounts or pulling money out early.

Fidelity’s Q2 2026 retirement analysis, released Sept. 3, found the average 401(k) balance reached $155,800. That’s a new record. It’s up 13% from a year earlier and roughly 10% from the first quarter alone. The average IRA balance climbed to $144,523, a 10% increase year over year. Both figures represent the highest levels Fidelity, the country’s largest 401(k) plan administrator, has ever recorded among its own participants.

That rebound looks even more striking against what happened just months earlier. Balances had actually fallen roughly 4% in the first quarter of 2026, dragged down by a market drop tied to the conflict with Iran. Understanding how accounts swung from that dip to a record high in a single quarter means looking at exactly what changed in the markets, and in how people were saving, between those two periods.

Markets Rebounded, but So Did the Workers Who Kept Contributing

The stock market did a lot of the heavy lifting this quarter. Through Sept. 2, the Dow Jones Industrial Average was up roughly 10% for the year, while the S&P 500 and Nasdaq had each climbed about 12%. Mike Shamrell, Fidelity’s vice president of thought leadership, credited the gains to “positive market performance with steady and consistent savings rates,” he told CNBC.

Market gains were only half the story, though. Combined employee and employer 401(k) contributions averaged 14.4% of pay, just shy of Fidelity’s recommended 15% target, with the employee portion alone hitting a record 9.6%. More than 8 in 10 participants, 81.2%, saved enough to capture their full employer match. IRA contributions climbed 36% compared with the same quarter last year, and women who had contributed continuously for at least five years averaged a balance of $273,400.

All of that is genuinely encouraging behavior by any reasonable standard. But the same report tracked a separate trend running in the opposite direction, one that shows up not in how much people are saving, but in how often they are dipping back into the money they already set aside. That number tells a very different story about financial pressure on the same group of savers.

Nearly One in Five Workers Now Has an Outstanding 401(k) Loan

The share of participants carrying an outstanding 401(k) loan reached 19.5% in the second quarter, edging higher than the year before. About 2.8% of workers took out a brand-new loan during the quarter alone. That’s nearly one in five people with a 401(k) through Fidelity. Each one currently owes money back to their own retirement account before it can keep compounding.

Hardship withdrawals climbed too. The share rose from 2.6% of participants a year earlier to 3% in this year’s second quarter. Under IRS rules, a hardship withdrawal only avoids the early-withdrawal penalty when someone faces an immediate, heavy financial need, things like preventing foreclosure or covering unforeseen medical bills. Cathy Curtis, a certified financial planner and founder of Curtis Financial Planning, warned that “borrowing or withdrawing from a 401(k) disrupts long-term retirement savings.”

Loans and hardship withdrawals are not actually the same thing, even though both pull money out of the same account. A 401(k) loan is generally repaid with interest and does not count as a taxable distribution, as long as plan rules are followed. A hardship withdrawal is permanent. It cannot be repaid, and it is typically subject to ordinary income tax plus a possible 10% penalty for anyone under 59½.

These Numbers Only Cover Fidelity’s Own Customers, Not All American Workers

One important caveat applies to every figure in this report. These numbers describe Fidelity’s own retirement-plan participants specifically, not American workers as a whole, and Fidelity happens to be the largest 401(k) administrator in the country. The averages themselves can also be misleading on their own. A relatively small number of very large accounts can pull an average balance well above what a typical saver actually has put aside.

That gap matters. The two headline trends, record balances and rising withdrawals, are not necessarily describing the same people. Someone with a large, growing account and someone leaning on a hardship withdrawal to avoid foreclosure could both be counted in this same report without ever overlapping. The overall system looks healthy in aggregate while individual households experience wildly different levels of pressure underneath that average.

For workers watching their own balance climb toward a comfortable retirement, the challenge described in this report is no longer simply about saving more money. It is about protecting what has already been saved from short-term financial pressure, medical bills, a job loss, a housing emergency, that can tempt even a disciplined saver into tapping an account meant to stay untouched for decades. Saving and protecting turn out to be two different skills.

This article is for informational purposes and isn’t personalized financial advice; a financial advisor or tax professional can help weigh options like loans or withdrawals against your own situation.