More Americans Make This Money Move in Possible Sign of Economic Woes
U.S.retirement savings are growing but more Americans are tapping their 401(k)s to cover emergencies, highlighting both improved saving behavior and increasing financial stress.
Key points:
– Fidelity data for Q4 2025 show average 401(k) balances at $146,400, marking a third consecutive year of double-digit growth. The figure is $14,700 higher than 2024, and there are about 665,000 401(k) millionaires, up from 537,000 the prior year. Fidelity executives emphasize that savers remain committed to long-term goals and that consistent saving benefits retirement outcomes.
– Vanguard data indicate tougher nuances: 6% of workers with 401(k) plans took hardship withdrawals in 2025,up from 4.8% in 2024 and a new record. Before the pandemic, the rate was around 2%. Withdrawals are typically used for emergencies such as preventing foreclosure, delaying eviction, or paying medical bills. Vanguard notes that federal law changes eased withdrawal restrictions and that more plans now offer hardship withdrawals.
– Despite the rise in hardship withdrawals, retirement balances are higher overall. Vanguard reports average participant balances increased about 13% in 2025, reaching nearly $168,000 by year-end. The trend reflects stronger savings behavior,aided by automatic enrollment,even as some workers rely on withdrawals as a safety net.
– Commentary from Fidelity’s Sharon Brovelli and Vanguard’s statements underscore the idea that staying invested and maintaining long-term savings discipline remains beneficial, while temporary financial pressures can make hardship withdrawals a necessary option for some.
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 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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