The stock market took retirement savers on a bit of a wild-mouse roller coaster type of ride in early 2026. We saw the Dow close above 50,000 points for the first time on February 6, but then unexpectedly dropped nearly 11% by the end of March following US air strikes and the ongoing war in Iran.
However, looking at the first quarter as a whole, the setbacks were not that bad.
When it comes to 401(k)s, savers have seen their account balances decline an average of 4% from the end of March through the end of 2025, according to the latest data released by Fidelity Investments.
Fidelity released its first-quarter retirement analysis on Thursday, May 28, with information that may shed light on how you are ahead of everyone else.
Who Wants to Be a 401(k) Millionaire?
The first few months of 2026 weren’t easy for anyone — even the 401(k) millionaire class.
During the first quarter, Fidelity reported 645,000 savers who could be dubbed 401(k)-built millionaires. This is down 3% from Q4 2025 but up 26% from Q1 2025.
The number of millionaires created by IRAs fell 2% in the first quarter to 571,622 savers compared with the fourth quarter last year, but is up 32% from the same quarter a year earlier.
To achieve this level, Fidelity said, these savers typically make regular contributions to the same account with the same employer for several years.
According to Fidelity, the average 401(k)-created millionaire is about 59 years old and has been investing in the same account for an average of 25 years.
Many are turning to 401(k) cash to get out of the jam
Not everyone is able to save consistently without resorting to their 401(k) plans for college bills, emergencies or other major expenses.
In the first quarter of 2024, Fidelity noted that 17.8% of workers had outstanding 401(k) loans. Just two years later, about 19.2% of participants had outstanding loans.
In the first quarter, 2.4% of participants started a new loan from their 401(k). This is 2.3% more than the same time a year ago.
The average amount of each new loan taken out is $8,420. Among participants who have taken out at least one loan, the outstanding loan amount is $10,550, according to Fidelity.
Kirsten Hunter Peterson, vice president of workplace thought leadership at Fidelity, said that sometimes some employees don’t have enough emergency savings to cover unexpected costs, so they take money from their retirement plans, such as plan loans that can be repaid.
According to Fidelity, a loan allows you to borrow money from your retirement savings and pay it back with interest over time, often within five years. Loan payments and interest go back into your account. Loans are a way to avoid penalties and taxes associated with premature withdrawal.
However, some people do not realize that a 401(k) loan must be repaid if one loses their job or takes a job at another company. Rules vary by 401(k) plans, but payout times can range from 30 days to 90 days. If you don’t repay the loan, you’ll pay taxes if you’re under age 59½ and a 10% penalty on the outstanding amount.
The IRS offers some exceptions for hardship withdrawals to avoid the 10% penalty on withdrawals before age 59½. You still have to pay ordinary income taxes on withdrawals. The IRS notes that buying a boat or a TV is not considered an immediate and burdensome financial need – there is no breakdown of the hardship withdrawal.
But you may qualify for a hardship withdrawal for certain situations, such as funeral expenses; Medical care expenses for the employee, employee’s spouse, dependents or beneficiaries; Costs directly related to the purchase of an employee’s principal residence; and funds necessary to prevent eviction from the employee’s principal residence or foreclosure on the mortgage on that residence.
Rule One: The employee could not reasonably obtain the funds from any other source.
Some people started saving more in 2026
Hunter Peterson said it’s encouraging to see a slight increase in overall savings rates in the first quarter at a time of greater uncertainty.
“Despite the many economic challenges people are facing, they are continuing to prioritize their future and their retirement,” Hunter Peterson told the Detroit Free Press, part of the USA TODAY Network.
During the first quarter, nearly one in five — or 18% — participants increased their retirement savings rate, according to Fidelity.
Many people don’t decide to direct more money toward retirement; Instead they work at companies whose 401(k) plans have a feature that automatically increases the percentage of pay an individual employee saves each year. Some people also decided to save more themselves.
The total savings rate for 401(k) savers – including both employer and employee contributions – reached 14.4%. That’s close to Fidelity’s recommended combined savings rate of 15%.
The average quarterly employer contribution amount reached a record high of $2,080 in the first quarter, up from the previous high of $2,020 a year earlier.
Earlier this year, the average retirement account balance in a Fidelity 401(k) reached $141,000 in the first quarter, down 4% from the fourth quarter of 2025.
But the average 401(k) balance is still up 11% from the first quarter of 2025 and up 14% over the past five years from the first quarter of 2021. If you go back 10 years, balances are 61% higher than in Q1 2016.
How anyone feels about their 401(k) can vary greatly.
To be honest, savers would prefer to see an average decline of 4% in the first quarter statement rather than an 8% or 10% decline.
Many younger workers who have several years left until retirement age tend to invest more aggressively in stocks and may take a bigger hit during the volatility in March. Yet many people nearing retirement age have more of a mix of stocks, bonds and money market funds.
The Dow Jones Industrial Average fell about 3.6% in the first quarter after closing at 48,063.29 points on Dec. 31, 2025.
And, fortunately, many 401(k) savers got a little relief in May as the Dow Jones Industrial Average once again closed above the 50,000 mark on a few days, including May 22 and May 26.
Retirement savings balances, of course, reflect dollars saved by individual workers, employer contributions, the way you invest the money in your plan, market gains or losses and yes, portfolio diversification.
Fidelity’s Hunter Peterson said many 401(k) savings plans are well-diversified with a mix of stocks and bonds, providing a way to hedge against highly volatile times for the stock market.
Target date funds, a popular choice for many savers, offer a collection of ready-mixed investments that are selected based on the year you expect to retire. The mix of stocks and bonds automatically readjusts based on the year that is closest to your expected retirement date. As you get older, the mix leans more toward bonds than stocks.
Roth 401(k) takes off with young workers
Another trend in the Fidelity data reflects some financially savvy moves — and confidence — by young adults.
As of the first quarter, more than one in five Gen Z workers — or 21.4% — contributed to a Roth 401(k). Gen Z represents the youngest members of the typical workforce, including those ages 29 and younger in 2026.
Hunter Peterson said more than 95% of retirement plans offered by employers through Fidelity now offer a Roth option. And many Gen Z employees are taking advantage of this.
Typically, withdrawals from a Roth 401(k) are tax-free in retirement if various rules are met. For example, a Roth 401(k) account must be established for at least five years, and generally, you must be over age 59½ to take tax-free and penalty-free withdrawals.
Because you’re working, you don’t get an upfront tax break on contributions you make to a Roth 401(k) each year, as you do with a traditional 401(k). A traditional 401(k) has tax-deductible contributions but comes with taxable withdrawals.
Hunter Peterson said many Gen Z workers are making less money and may face lower federal income tax rates early in their careers, making the upfront tax benefit with a traditional 401(k) somewhat less attractive than for someone in a higher tax bracket.
“They’re taking advantage of that Roth feature at this point in their lives,” she said.
Higher earners can also take advantage of the Roth 401(k). Fidelity notes that high earners are not restricted from contributing to Roth 401(k)s, which is different from the rules associated with Roth IRAs.
For 2026, if your modified adjusted gross income is less than $153,000 for single individuals and less than $242,000 if married and filing jointly, you can contribute the full amount to a Roth IRA.
Fidelity said IRA contributions reached a record high in the first quarter due to strong demand for contributions to tax-advantaged Roth IRAs.
In the first quarter, about 67% of contributions to IRA accounts consisted of money going to Roth accounts. Roth conversion transactions increased 41% year-over-year, highlighting the continued acceleration of Roth adoption.
Women committed to saving for retirement
Earlier this year, Fidelity noted that women have made a stronger commitment to retirement savings over the past several years.
The average 401(k) balance among women has grown 22% over the past five years, while savers overall have increased 20%. For women who have been in a 401(k) for 15 consecutive years, the average balance at the end of 2025 was $508,700, up from $453,500 in 2024.
Nearly four in 10 women increase their 401(k) savings rate in 2025. And what’s even more shocking is that 47% of Gen Z women increased their savings rate. Again, plans that make automatic changes to contributions enable many people to accumulate more savings in these plans.
More discussion about stocks
In its latest report, Fidelity also highlighted data from its 2026 Stock Plan Participant Research, which focuses on equity compensation as an employee benefit. This includes a variety of benefits, from stock options to employee stock purchase plans, where employees can purchase their company stock at a discounted price.
Hunter Peterson said research has shown that giving employees ownership in a company, even small start-ups, can increase motivation and engagement.
The latest data from Fidelity shows that many employees view equity compensation as a gateway to investments, a source of financial security and a reason to stay with their employer.
Fidelity said 43% of participants say they became first-time investors through their company’s stock plan. And 56% of employees say equity compensation is a benefit that makes them more likely to stay with their employer, while 65% cite it as an important consideration in accepting a job.
“It’s definitely a trend,” Hunter Peterson said, “where we’re seeing more companies consider it as a benefit because of the great results they’re experiencing on their end.”
Contact personal finance columnist Susan Tompor at: (email protected). X Follow him on @tompor.
Reporting by Susan Tompor, USA TODAY Network/Detroit Free Press. USA TODAY Network via Reuters Connect.