401(k) loans just jumped 80%. Why workers are tapping savings early

Fidelity's Q2 2026 retirement analysis found that the average 401(k) balance rose 10.5% over the last quarter to $155,800, the largest quarterly increase since 2020, according to AOL.com. The data covers 25.8 million participants in Fidelity retirement plans. Despite the rising balances, the Federal Reserve found that only 35% of non-retired adults think their retirement savings are on track, and 14% of workers borrowed from, cashed out, or cut their contributions last year.

The headlines signal a broader trend of workers tapping retirement savings early. Cleveland.com reported that nearly 1 in 5 workers have a 401(k) loan, while USA Today reported that 401(k) loans jumped 80%. 401k Specialist and Insurance Business both reported that 401(k) balances rose even as hardship distributions kept climbing in Q3.

Fidelity's generational breakdown shows Baby Boomers have the highest average balance at $283,200 and contribute 12.2% of pay, more than any other generation. Gen X averages $240,700 with a 10.6% contribution rate. Millennials average $94,300, up 26% from the previous year, and contribute 9% on average. Gen Z averages $20,800 with a 7.6% contribution rate.

Fidelity reported that combined employee and employer contributions stayed flat at 14.4% of pay compared to the previous quarter, meaning much of the balance growth came from market performance rather than increased saving. Workers aged 50 and older can make catch-up contributions to add extra to their accounts. Fidelity's data reflects Americans with access to workplace retirement plans, and not all workers have that option; those without can use IRAs if eligible.