According to Fidelity Investments, the average 401(k) balance rose 13.1% year-over-year to $155,800, while the average individual retirement account balance increased 10% to $144,523 in the second quarter of 2026. These gains are attributed to a recovering market, with the Dow Jones Industrial Average up approximately 10% year-to-date and the Nasdaq Composite and S&P 500 each rising over 12%.
Despite these positive trends, there are concerning signs of financial stress among workers. The percentage of employees with outstanding 401(k) loans increased to 19.5%, and 2.8% took out new loans in the second quarter. Additionally, the share of workers making hardship withdrawals rose to 3%, up from 2.6% the previous year.
Experts, including Cathy Curtis, a certified financial planner, suggest that these trends reflect increasing financial pressures due to rising costs of living and persistent inflation. Curtis warns that tapping into retirement accounts can disrupt long-term savings and create a cycle of dependency on these funds for everyday expenses, potentially jeopardizing future financial security