Fidelity released its first quarter retirement analysis on Thursday, May 28, reporting that average 401(k) balances fell 4% from the end of 2025 through the end of March 2026.
The fidelity q1 2026 report also counted 645,000 401(k)-created millionaires in the first quarter of 2026 — a 3% drop from the fourth quarter of 2025 but a 26% increase from the first quarter of 2025 — and 571,622 IRA-created millionaires, down 2% from the prior quarter and up 32% year over year.
Kirsten Hunter Peterson put the shifts in human terms: "many times, some employees do not have sufficient emergency savings to cover unexpected costs so they take money from their retirement plans, such as a plan loan that can be repaid." The report shows more participants are tapping those loans even as market swings shave account values.
The raw numbers underscore how narrowly the millionaire tally can move while average balances slip. Fidelity said the average 401(k)-created millionaire is almost 59 years old and has been investing in the same account for an average of 25 years — a pattern that, Fidelity notes, produces many of those millionaire outcomes through steady contribution and long tenure with the same employer.
But the Q1 snapshot also highlights strain in the broader workforce. In the first quarter of 2026, 19.2% of participants had an outstanding 401(k) loan, up from 17.8% in the first quarter of 2024. New loan initiation rose slightly: 2.4% of participants took a new 401(k) loan in Q1 2026, versus 2.3% in Q1 2025. The average new loan was $8,420, and among participants who have taken at least one loan the typical outstanding balance is $10,550.
Those figures matter because of the rules that govern plan loans. A 401(k) loan often must be repaid within five years. If a worker leaves a job or takes another position, plans usually require repayment within 30 days to 90 days. If a loan is not repaid after a job change and the borrower is under age 59½, taxes and a 10% penalty are owed on the outstanding balance — a sequence that can turn a short-term fix into a long-term loss.
The context for the decline in balances is early-2026 market volatility. The Dow rose above 50,000 for the first time ever on Feb. 6 before later dropping nearly 11% by late March following sudden U.S. air strikes and the ongoing war in Iran, a swing Fidelity says affected retirement savers and contributed to the 4% drop in average 401(k) balances in the first quarter of 2026.
The tension in the report is clear: steady savers who have accumulated seven-figure accounts by staying in one plan for decades contrast with a larger set of participants who are drawing on retirement assets to cover near-term needs. Fidelity notes that plan loans can be used to avoid penalties and taxes associated with early withdrawals, which makes them attractive, but the growing prevalence of loans carries its own risks if employment changes or markets remain unsettled.
The fidelity q1 2026 report paints a picture of modest gains in the ranks of retirement millionaires alongside weakening average balances and rising reliance on loans. That combination suggests the headline number — hundreds of thousands of 401(k)-created millionaires — masks a fraying middle: many participants are closer to the line between a manageable short-term loan and a taxable, penalized distribution if jobs or markets move against them.
For savers and plan sponsors, the most consequential fact is not the exact millionaire tally but the alignment of three trends documented in the report: market volatility that trimmed balances, a creeping rise in outstanding plan loans, and the narrowness of the millionaire cohort, who are mostly near retirement and have long tenures in the same account.
