Is your 401(k) balance dropping? You’re not alone.

2.3% of workers took a hardship withdrawal in the third quarter of 2023

Inflation and market volatility pressured retirement savers this year, pushing some to tap into their accounts.

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It hasn’t been smooth sailing for retirement savers this year, as evidenced by Fidelity Investment’s latest retirement data.?

Investors are reeling from a mix of higher inflation and market volatility, the company said, and that has resulted in retirement-account balances declining from last quarter and the number of loans and withdrawals increasing. Fidelity uses data from its 45 million retirement accounts, including 401(k) and 403(b) plans and IRA accounts, in its quarterly reports.?

Even with inflation slowly receding, U.S. consumers remain worried about the economy and don’t feel confident that inflation will ease in the next year, according to a Federal Reserve report. Consumer sentiment fell to a six-month low this month, the University of Michigan found.?

The average 401(k) balance in the third quarter of 2023 was $107,700, down from $112,400 in the second quarter, according to Fidelity. For 403(b) plans, balances fell to $97,200 from $102,400, and for IRAs, the average balance dropped to $109,600 from $113,800.??

See: Are inflation and debt pushing you to raid your retirement savings early? You’re not alone.

The rising cost of living, thanks to inflation, was a stressor for eight out of 10 Americans, according to Fidelity, with 57% saying they wouldn’t be able to pay for a $1,000 emergency.?

Economic stressors are pushing some savers to raid their retirement accounts. Among retirement-plan participants, 2.8% took a loan from their 401(k) plans in the third quarter of 2023, up from 2.4% in the third quarter of 2022. The number of people with an outstanding loan rose to 17.6% from 16.8% last year. And 2.3% of workers took a hardship withdrawal in the third quarter of 2023, up from 1.8% in the same period last year. The top reasons were foreclosures or evictions and medical expenses, Fidelity reported.?

But investing for the long haul has its advantages. Although balances for accounts that have been open for five, 10 and 15 years dropped this quarter from last, those balances were still higher than they were at this time last year, Fidelity reported.?

Retirement savers continued to contribute to their accounts consistently from the quarter before and contributed slightly more than the same time last year, the company said. Baby boomers were putting away the most: 16.7% of their income, including employee and employer contributions.?

Read: Gen Z women aren’t afraid to invest, but they need to remember this one thing

Gen Z investors are more focused on IRAs, the report showed. There was a 63% increase in the number of IRA accounts between last year and this year, and dollar contributions rose by 51%. Investors, regardless of age, leaned more toward Roth IRAs, which feature after-tax contributions and tax-free withdrawals, over traditional IRAs.