Retirement savers pushed their 401(k) contribution rate to a new high for the second quarter running, even as their account balances climbed on the strength of the stock market rather than paychecks alone. Fidelity Investments, the country’s largest 401(k) recordkeeper, reports that savers put away a record 14.4% of pay in the second quarter of 2026, while average balances jumped 10.5% over the prior quarter, the sharpest quarterly gain since late 2020.
A Savings Rate At Its Highest Point On Record
The 14.4% average savings rate for 401(k) participants held at “record levels for the second consecutive quarter,” Fidelity states in its Q2 2026 retirement analysis, released September 3, 2026. That figure combines both employee and employer contributions and sits close to the 15% total savings rate Fidelity has long recommended for retirement readiness, the same release notes. Fidelity reports a similar pattern among 403(b) savers, whose contribution rate reached its own record of 12% in the same quarter, indicating the higher-savings trend was not limited to private-sector 401(k) plans alone.
Sharon Brovelli, president of Workplace Investing at Fidelity, framed the combination directly: “The combination of record account balances, strong savings behaviors and effective plan design tell an encouraging story,” she said, according to the same press release. Fidelity also reports that more than 81% of 401(k) participants saved enough during the quarter to capture their full employer matching contribution, a detail that ties the record savings rate to a specific, avoidable way workers otherwise leave money on the table.
Inside the planner: Fidelity’s report tracks a record contribution rate and a 10.5% quarterly balance jump, but it does not address which account a retiree should draw from first once that balance needs to become income. Open The Retirement Tax & Withdrawal Planner.
Why Balances Jumped 10.5% In One Quarter
The 10.5% quarterly increase in average 401(k) balances marks “the strongest quarterly growth since Q4 2020,” when balances rose 10.8%, per Fidelity’s release. Crucially, Fidelity attributes that jump to “a strong stock market” working alongside savings behavior, not to contributions alone, meaning a meaningful share of the increase reflects investment returns on existing balances rather than new money going in. Average 401(k), 403(b) and IRA balances all reached record highs in the same quarter, the release states, a distinction that matters for any saver trying to separate how much of a bigger number came from paycheck deductions versus how much came from the market simply moving in their favor.
IRA Balances And Younger Savers Show The Same Pattern
The record-savings story extends beyond workplace plans. The average IRA balance reached $144,523 in the second quarter, up 10% from the first quarter of 2026 and up 10% from a year earlier, according to Fidelity’s Q2 2026 data-and-insights release. Female IRA investors averaged a lower $130,231 balance, though that figure was up 12% year-over-year, a faster pace of growth than the overall IRA average posted in the same release. Women also directed 72% of their IRA contributions to Roth accounts, up 3.4 percentage points from the second quarter of 2025, Fidelity reports.
Younger savers, meanwhile, are driving a disproportionate share of the improvement. Millennials’ average 401(k) balances rose 14.2% for the quarter and 26.1% year-over-year, the same Fidelity release states, outpacing the 10.5% overall 401(k) balance growth Fidelity reported in its companion press release. Millennials and Gen Z also led Roth 401(k) participation, at 21.9% and 20.1% respectively, with both generations contributing roughly $6,000 on average to traditional IRAs in the quarter. For a household with an adult child in either generation, those figures show a younger cohort saving at a rate, and in account types, that differ meaningfully from the workforce-wide 14.4% contribution figure driving the main headline, with a heavier tilt toward Roth accounts that changes how, not just how much, that generation’s retirement savings will eventually be taxed.
The Gap Between A Rising Balance And A Retirement Plan
A record balance and a record savings rate answer the accumulation side of retirement planning, but neither figure says anything about what happens once that money needs to be turned into income, or how much of it will be taxed on the way out. A worker whose 401(k) balance jumped 10.5% in a single quarter because of market gains has not necessarily changed how that balance will be taxed at withdrawal, whether required minimum distributions will apply, or which account, a traditional 401(k), a Roth balance or a taxable brokerage account, makes the most sense to draw from first in retirement. Fidelity’s release measures how much is being saved and how fast it is growing; it does not address the withdrawal side of the equation at all.
A Second Straight Record, Not A One-Time Spike
Because Fidelity describes the 14.4% savings rate as a record for two consecutive quarters, the trend line matters as much as the single data point: this is not a one-quarter anomaly but a savings behavior that has now held at its peak level across two full reporting periods. For a household comparing its own contribution rate against the national figure, that consistency gives a more reliable benchmark than a single quarter’s number would, since Fidelity’s data draws on the retirement accounts it actually administers rather than a survey of self-reported savings intentions.
What A Record Balance Doesn’t Answer
Fidelity’s Q2 2026 data shows 401(k) savers contributing a record 14.4% of pay and balances up 10.5% in a single quarter, driven in part by stock market gains rather than contributions alone. What that data does not cover is how those larger balances will be taxed once withdrawals begin, or which account should be tapped first to keep that tax bill as low as legally possible.
The Retirement Tax & Withdrawal Planner works through that gap with four calculators covering provisional income, IRMAA tier, the RMD schedule and Roth bracket fill, plus the senior deduction that applies to many retirement-age filers.
See the account withdrawal order in The Retirement Tax & Withdrawal Planner.
This article was produced with AI assistance and checked against the primary sources linked above.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
