401(k) balances to drop 4% in 2026 as Americans continue to save for retirement; learn about recent trends and changes

this stock market The first few months of 2026 are unstable. Dow Jones According to USA Today, the stock market first topped 50,000 points on February 6, but then fell nearly 11% by the end of March in the wake of U.S. airstrikes and the ongoing war with Iran.

Despite the market volatility, the losses were not as severe as many feared. According to the Fidelity report, average retirement account balances fell just 4% this quarter.

The number of 401(k) millionaires has declined. Fidelity reported that the number of people with at least $1 million in a 401(k) account was 645,000 in the first quarter of 2026, down 3% from the previous quarter. However, there are still more 401(k) millionaires than there were a year ago. This figure represents a 26% increase from the first quarter of 2025.

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The average age of 401(k) millionaires is nearly 59 years old. They typically stay invested in the same account for about 25 years, according to Fidelity. More and more workers are borrowing from their retirement savings. In the first quarter of 2026, the share of workers with outstanding 401(k) loans rose to 19.2%. This is an increase from two years ago. In the first quarter of 2024, only 17.8% of workers had a 401(k) loan.

401(k) loans allow workers to borrow from retirement savings. The money is usually repaid with interest over five years. As Fidelity explains, loan repayments will be returned to workers’ retirement accounts. A 401(k) loan can help avoid the taxes and penalties associated with early withdrawals. Workers may face problems if they leave their jobs.

Fidelity says 401(k) loans typically need to be repaid when someone changes jobs or loses their job. The repayment period may be short. Some plans may require repayment within 30 to 90 days. Failure to repay can become expensive. Workers under the age of 59 1/2 may face taxes and a penalty of 10% of the unpaid loan balance.

Workers must prove they can’t get the money elsewhere. This is one of the requirements for a hardship withdrawal. As Fidelity highlights, many Americans have increased their retirement savings despite economic uncertainty. Nearly one in five workers is saving more. About 18% of participants increased their retirement contribution rates in the first quarter of 2026. Automatic increases help increase savings. Many employers automatically increase contribution rates every year. Some workers also choose to save more money themselves.

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The average Fidelity 401(k) balance is $141,000, as reported by Fidelity in the first quarter of 2026. The balance was lower than the previous quarter. Average account balances fell 4% from the fourth quarter of 2025. But the balance is still higher than last year. The average balance is 11% higher than Q1 2025 levels. Long-term growth remains strong. The balance is 14% higher than five years ago. Retirement balances have increased dramatically over the past decade. 61% higher than the first quarter of 2016.

Retirement account balances depend on several factors. These include employee savings, employer contributions, investment options and market performance. As Fidelity Investments’ Kirsten Hunter Peterson explains, diversification helps protect some investors. Target-date funds remain a popular choice. These funds automatically adjust investments as retirement approaches.

Older investors in target-date funds are gradually turning to bonds. Roth 401(k) plans are growing in popularity among younger workers. More than one in five Gen Z employees uses a Roth 401(k). According to Fidelity, the participation rate reached 21.4%. Most employer plans now offer a Roth option. According to Kirsten Hunter Peterson, more than 95% of Fidelity managed plans include a Roth 401(k). Roth 401(k) withdrawals are tax-free in retirement. Certain rules must be met.

Roth IRA rules are different. Income limits apply to Roth IRA contributions. IRA contributions hit record highs. Fidelity said strong demand for Roth IRAs helped drive growth. Most IRA contributions go into Roth accounts. Approximately 67% of IRA contributions are deposited directly into a Roth IRA. Ross’s conversions surged. Conversion transaction volume increased 41% year over year.

Fidelity said that although 401(k) balances fell 4% in early 2026 due to market volatility, Americans continued to save, employer contributions reached record levels and long-term retirement growth remained positive.