While the balances of Americans’ retirement accounts are generally rising, more households are withdrawing funds to cover financial emergencies — a worrying sign in a bullish economy with persistent affordability issues.
Fidelity — one of the largest 401(k) providers in the country — revealed that average account balances increased to $146,400 in the fourth quarter of 2025, per a report from NewsNation.
That marks the third consecutive year of double-digit growth as Americans save more and benefit from a surging stock market.
It’s also a $14,700 increase from 2024.
Fidelity added that there are now 665,000 401(k) millionaires as of the fourth quarter — an increase from 537,000 just one year earlier.
“Despite uniquely challenging times, retirement savers remain committed to their financial futures by staying the course with their retirement savings,” Sharon Brovelli, the president of workplace investing at Fidelity Investments, said in the data release.
“The consistency so many Americans show in maintaining responsible savings behaviors and keeping a long-term perspective will serve them well in retirement,” she added.
But there’s a massive catch.
Vanguard — another major provider of financial services — released data showing that 6 percent of workers with 401(k) plans took hardship withdrawals.
That’s an increase from 4.8 percent in 2024, and a new record for the metric.
Before COVID, the share of workers taking hardship withdrawals was around 2 percent.
Such withdrawals are usually made in emergency situations like preventing foreclosure, delaying eviction, or paying medical bills.
“Last year, a record 6% of workers in 401(k) plans administered by Vanguard Group took a hardship withdrawal [from their 401k]. That is up from 4.8% in 2024 and a prepandemic average of about 2%, according to Vanguard.” pic.twitter.com/dDyyA97ygd
— Tom Elliott (@tomselliott) March 4, 2026
“Given that it’s now easier to request a hardship withdrawal and that automatic enrollment is helping more workers save for retirement, especially lower-income workers, a modest increase isn’t surprising,” Vanguard said in a report.
“And for a small subset of workers facing financial stress, hardship withdrawals may serve as a safety net that may not otherwise have been available without plan-implemented automatic solutions,” the company added.
Indeed, a change in federal law eased restrictions on hardship withdrawals, according to NewsNation.
More retirement plans are offering hardship withdraws as well.
Beyond the findings about hardship withdrawals, the Vanguard data indicate higher retirement savings, alongside the release from Fidelity.
In 2025, average participant balances increased 13 percent, reaching nearly $168,000 by the end of the year, per Vanguard.
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