Retirement savings in the United States have reached record levels, but more workers are also withdrawing money from their 401(k) accounts, according to a new Fidelity report.

  • Why it matters: Record-high retirement account balances are good news, but they do not necessarily mean workers have enough money to cover their current expenses.

The increase in withdrawals shows that saving for the future can coexist with the need to access money for immediate expenses.

401(k) Retirement Savings Reach New Record

The average 401(k) plan balance reached $155,800 during the second quarter of 2026, according to Fidelity’s analysis.

This represents an increase of approximately 10% from the previous quarter and 13% over the past year.

Individual retirement accounts, known as IRAs, also reached a record high, with an average balance of $144,523.

  • What drove the growth? Primarily, stock market gains and workers’ continued contributions to their retirement savings. The average 401(k) savings rate remained at 14.4%.

It is important to remember that these figures are averages. They do not mean the typical worker has $155,800 saved, as balances can vary significantly based on age, income, and years of contributions.

401(k) Retirement Savings Hit Record $155,800, but Withdrawals Rise
401(k) Retirement Savings Hit Record $155,800, but Withdrawals Rise – PHOTO: Shutterstock

Why Are More Workers Withdrawing Retirement Savings?

As balances grew, Fidelity also recorded an increase in the use of retirement accounts for immediate financial needs.

  • Not all transactions are the same: A worker can take out a loan from a 401(k), which must later be repaid, or make certain withdrawals because of financial hardship.

The problem is that accessing those funds before retirement can have long-term consequences.

According to CNBC, financial experts often advise against 401(k) loans because money removed from the account loses the opportunity to continue growing through compound interest.

  • In simple terms: The cost includes not only the money withdrawn today but also all the potential growth that money could have generated in the coming years.
  • The new report reveals two realities: Americans continue to accumulate more retirement savings, but some workers also need to access those funds before reaching retirement age.

What to Do Before Withdrawing Money From a 401(k)

Withdrawing money from a 401(k) can help resolve an emergency, but it can also reduce the amount available when you retire. Before doing so, consider other alternatives:

  • Use an emergency fund first, if one is available.
  • Reduce or postpone nonessential expenses.
  • Explore payment options with banks, creditors, or service providers.
  • Review the consequences of a withdrawal, as it may involve taxes, penalties, and lost future growth.

If using a 401(k) is unavoidable, it is essential to understand the true cost of withdrawing that money before making a decision.