Americans’ 401(k) and IRA Balances Hit Record Highs. More Workers Are Raiding Retirement Savings for Cash.

Americans' retirement accounts have never looked healthier on paper. But beneath the record balances a growing number of workers are dipping into their savings to cover financial pressures today.

Average 401(k) and individual retirement account balances climbed to all-time highs in the second quarter of 2026, according to new data from Fidelity Investments, the nation's largest provider of 401(k) plans. The average 401(k) balance reached $155,800, an increase of 13.1% from a year earlier. IRA balances rose 10% over the same period to a record $144,523.

The rebound follows weakness earlier in the year, when financial markets sold off amid uncertainty surrounding the Iran war. Stocks have since recovered sharply. Through Wednesday's close, the Dow Jones Industrial Average was up about 10% for the year, while the S&P 500 and Nasdaq Composite had each gained roughly 12%.

Those market gains were not the only reason retirement accounts grew. Workers have continued putting substantial portions of their income toward retirement. Fidelity found that the average 401(k) savings rate, combining employee and employer contributions, remained at 14.4%, just below the company's recommended 15% annual savings benchmark.

"When you combine positive market performance with steady and consistent savings rates, that's when you see these positive gains," Mike Shamrell, Fidelity's vice president of thought leadership, told CNBC.

But another set of numbers in the report paints a less comfortable picture of American household finances. The percentage of workers with an outstanding 401(k) loan climbed to 19.5% in 2026, slightly higher than a year earlier. Another 2.8% of workers took out a new 401(k) loan during the second quarter.

Hardship withdrawals are also becoming more common. Fidelity found that 3% of workers took a hardship withdrawal, compared with 2.6% a year earlier. Under IRS rules on hardship withdrawals, distributions may be permitted when someone faces an "immediate and heavy financial need." Qualifying circumstances can include certain medical expenses and costs related to preventing eviction or foreclosure.

The increase could indicate that household budgets are becoming more strained despite the strength of retirement portfolios. Certified financial planner Cathy Curtis, founder and CEO of Curtis Financial Planning, told CNBC that higher costs for housing, utilities, groceries and transportation can leave households facing a "cash crunch," particularly when wages have not kept pace with their cost of living.

Inflation and affordability remain major challenges for consumers. Heather Long, chief economist at Navy Federal Credit Union, described inflation as the "No. 1 problem" facing the U.S. economy and affordability as the second.

The contrast creates an unusual financial picture of Americans accumulating more wealth for retirement while simultaneously struggling to meet current expenses. Using retirement savings to close that gap can carry significant long-term consequences.

Curtis warned that borrowing or withdrawing money from a 401(k) interrupts the process of building retirement wealth. Money removed from an account no longer benefits from the same potential investment gains and compound growth, potentially turning a relatively modest withdrawal today into a much larger reduction in future savings.

There may also be a behavioral risk, as once workers begin treating retirement accounts as another source of cash for everyday expenses, Curtis said, they may become more willing to tap them again.