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(NewsNation) — By the close of 2025, a robust stock market had propelled the count of 401(k) millionaires to unprecedented levels. Nonetheless, an increasing number of employees are dipping into their retirement funds to address financial crises.
Recent statistics from Fidelity and Vanguard reveal intriguing insights into the status of Americans’ retirement portfolios, highlighting a scenario where swelling account balances sometimes mask underlying financial pressures.
Fidelity Investments, a major player in the U.S. 401(k) sector, reported that the average 401(k) balance reached $146,400 by the fourth quarter of 2025. This figure marks an 11% rise from the previous year, signifying a $14,700 climb from 2024. The growth, attributed to a thriving stock market and robust savings habits, marks the third consecutive year of double-digit growth.
These circumstances have contributed to the surge in 401(k) millionaires, which soared to a record 665,000 by the end of the year, a significant jump from 537,000 in the preceding year, according to Fidelity.
Those factors helped drive the number of 401(k) millionaires to a record 665,000 in the fourth quarter, up from 537,000 a year earlier, according to Fidelity.
President Donald Trump has touted retirement savers’ recent gains, saying “everybody is up, way up” during his recent State of the Union address.
But recent polling suggests Americans are far less upbeat about the economy, with most saying it’s not booming. Separate data from Vanguard could partly explain why.
A record 6% of workers in 401(k) plans administered by Vanguard took a hardship withdrawal in 2025, up from 4.8% in 2024. Before the pandemic, the typical rate was around 2%.
Hardship withdrawals allow savers to tap their retirement funds early for an “immediate and heavy financial need” but are generally seen as a last resort. Common reasons for using them include preventing foreclosure or eviction, and covering medical bills.
The latest uptick could be a sign of growing financial distress as more workers dip into their retirement savings early, though Vanguard pointed to other factors driving the trend.
“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 wrote in a preview of its annual “How America Saves” report.
Hardship withdrawals are up since 2018, after federal legislation relaxed restrictions and eliminated a rule that required workers to take out a 401(k) loan first. The share of plans offering hardship withdrawals has also risen in recent years, Vanguard data shows.
Workers generally have to wait until they are 59 1/2 — or 55 in certain cases — to take 401(k) distributions penalty-free. Those who take hardship distributions before then typically face a 10% early withdrawal penalty, in addition to income taxes, unless an exception applies.
Vanguard’s data also showed strong retirement account gains in 2025, with average participant balances rising 13% to $167,970 by year’s end. The median balance was up 16% in 2025 but far lower in dollar terms, at $44,115, suggesting higher-balance savers are pushing the average higher.