The second-quarter market rebound pushed American retirement balances to their highest levels on record, but a growing share of workers are also tapping those accounts to cover near-term bills. That is the two-sided picture in Fidelity Investments' Q2 2026 Retirement Analysis, released Thursday and covering 25.8 million participants across 27,300 corporate defined contribution plans as of June 30.
A Full Recovery From the First-Quarter Slide
The average 401(k) balance climbed to $155,800 at the end of June, up 10.5% from the prior quarter and 13.1% from a year earlier, according to Fidelity. That more than erases the 4% drop that took balances down to $141,000 in the first quarter, when the Iran war triggered a broad market sell-off.
Average IRA balances rose to $144,523, a 10% gain from both the prior quarter and the year-ago period, up from $131,400 at the end of March. Average 403(b) balances gained roughly 12% in the quarter to $145,000, a 16% increase from a year earlier.
The gains tracked the market. The S&P 500 rose about 15% during the second quarter, and Fidelity noted the recovery lifted account values across every plan type it administers.
The Millionaire Club Grows by Nearly a Third
The number of Fidelity 401(k) accounts holding $1 million or more jumped to 769,000, up from 654,000 at the end of the first quarter, and nearly 30% higher than a year earlier. IRA millionaires climbed to 684,140 from 571,622 in March.
The typical 401(k) millionaire is 58 years old, has been saving for 25 years, and defers 17.3% of pay, or 25.8% once the employer match is included. Gen X accounts for 62% of the group, baby boomers about 31%, and millennials 6%.
"Much of the strong retirement savings we saw this quarter didn't happen overnight," said Mike Shamrell, Fidelity's vice president of thought leadership, attributing the results to "years, and in many cases decades, of consistent saving."
Savings Rates Hold at Record Levels
The total 401(k) savings rate stayed at 14.4%, matching the record set in the first quarter and just shy of the 15% combined rate Fidelity recommends. Employees contributed an average 9.6% of pay, also a record, with employers adding 4.8%. About 81.2% of participants captured their full employer match, and 12.1% raised their contribution rate during the quarter.
IRA contributions were 36% higher than in the second quarter of 2025.
"The combination of record account balances, strong savings behaviors and effective plan design tell an encouraging story about how Americans are approaching retirement," said Sharon Brovelli, president of workplace investing at Fidelity.
Leakage Keeps Rising
The strain beneath the headline numbers is harder to ignore. The share of participants with an outstanding 401(k) loan rose to 19.5% from 19.2% in the first quarter, and 2.8% of workers initiated a new loan during the period. The share taking a hardship withdrawal, which requires an "immediate and heavy financial need" under IRS rules such as avoiding foreclosure or paying medical bills, climbed to 3% from 2.6% a year earlier.
Financial advisors generally warn against both. Loans at least return the money to the participant's own account with interest, while hardship withdrawals are taxed and cannot be repaid, permanently forfeiting the compounding on those dollars.
What It Means for Savers
The lesson from the past two quarters is that savers who kept contributing through the drawdown are well ahead of where they started. The rising loan and hardship figures, however, suggest that inflation and borrowing costs are pushing more households to treat retirement accounts as an emergency fund. With the Federal Reserve still weighing a rate hike this month, that pressure is unlikely to ease soon.
Sources: Fidelity Investments Q2 2026 Retirement Analysis, CNBC, Yahoo Finance.