Fidelity Sees Quarter-on-Quarter Decline in Retirement Balances

The third quarter also saw increases in withdrawals and loans as participants managed expenses amid inflation and higher borrowing costs.

Individual retirement account and 401(k) balances with the nation’s largest recordkeeper saw a slight decline in the year’s third quarter, with withdrawals and loans showing a gradual increase, according to the latest data from Fidelity Investments.

The average 401(k) balance declined 4% from Q2 2023 to $107,700 in Q3, Fidelity found. For 403(b)s, the average account balance dropped by 5% from the previous quarter to $97,200, and, finally, the average IRA balance experienced a 4% decrease from the last quarter, falling to $109,600. However, this figure reflects an 8% increase from the same quarter last year and a 28% jump from a decade ago.


Average Retirement Account Balances Q3 2023

Q2 2023

Q3 2022

Q3 2018

Q3 2013



















In announcing the data, Fidelity explained that all of the drops came from relatively high points of accumulation when compared to prior years. 401(k) balances, when compared with the same quarter a year ago, were actually up 11%, and 403(b)s, similarly, were up 11% when compared with the same period in 2022. IRAs, when looking back a year, were up 8% from the same quarter, Fidelity noted.

That full picture, despite the decline in account balances, points to continued robust retirement savings behaviors, according to Fidelity. Many employers, according to the firm, are working to address the challenge of unexpected expenses.

“Americans have become accustomed to riding the economic waves of the past several years, and this quarter is no different,” Kevin Barry, president of workplace investing at Fidelity Investments, said in a statement. “They are learning how to stay afloat in very challenging financial conditions—including having enough money set aside should an emergency arise. Through it all, we are pleased to see retirement savers continue to stay the course with steady savings rates and continued commitment to their futures.”

Strains Showing

The report also revealed, however, that despite consistent contribution levels, an increasing number of individuals are accessing their retirement savings through in-service withdrawals, hardship withdrawals or loans.

In Q3, 2.3% of workers took a hardship withdrawal, up from 1.8% in Q3 2022, citing reasons such as avoiding foreclosure, eviction and medical expenses.

Over the last 18 months, inflation and cost-of-living pressures have also contributed to a rise in loan activity, Fidelity noted. In Q3, 2.8% of participants took a loan from their 401(k), consistent with Q2 and up from 2.4% in Q3 2022. The percentage of workers with an outstanding loan increased slightly to 17.6%, compared to 17.2% last quarter and 16.8% in Q3 2022.

Depending on an employer’s plan guidelines, individuals may opt for in-service withdrawals instead of loans, in the process assuming taxes and penalties but avoiding repayment. In Q3, 3.2% of participants took an in-service withdrawal, marking a 2.7% increase from a year ago, according to the report.

Managing Results

In its report, Fidelity also identified ways in which employers are actively exploring plan features to enhance the retirement planning efforts of their workforce, particularly during periods of market volatility. To that end, workplace managed accounts are gaining popularity as an option for retirement savers seeking personalized, professional assistance in aligning their investment strategy with their retirement goals, the firm noted.

The survey revealed a 60% increase in the percentage of plans offering workplace managed accounts in the last five years. More than 10,000 plans on Fidelity’s platform now offer a workplace managed account, and 80% of participants enrolled in a Fidelity managed account are on track to cover retirement expenses.

Fidelity’s Q3 2023 401(k) data was based on 25,300 corporate defined contribution plans and 22.9 million participants, as of September 30. Its IRA analysis was of 14.6 million accounts as of September 30, 2023, and its 403(b) data was based on 10,165 tax-exempt plans and 8.3 million plan participants as of September 30, 2023.