In the first quarter of 2026, average 401(k) balances fell by 4% to $141,000, while individual retirement account balances also decreased by 4% to $131,380. This decline is attributed to market volatility following the outbreak of the Iran war, which caused significant stock selloffs, including a 5.1% drop in the S&P 500 in March.
Despite a subsequent market rebound, with the Dow Jones up approximately 5.3% year-to-date, more savers are tapping into their retirement funds. The percentage of workers with outstanding loans from their 401(k)s rose to 19.2%, and those taking hardship withdrawals increased to 2.5%.
Experts, including Douglas Boneparth, emphasize that early withdrawals can lead to long-term financial consequences, including taxes and penalties, and reflect broader financial pressures on households due to rising living costs.
However, the majority of retirement savers continued to contribute, with the average contribution rate reaching a record high of 14.4%, indicating a commitment to long-term savings despite current challenges