Retirement Balances Rose in the Third Quarter—But Financial Stress Didn’t Disappear

Retirement investors are benefiting from stock market gains, but many are still feeling financial strain.

Bank of America reviewed data from over 4 million retirement plan participants in its employee benefits programs, noting that the average 401(k) balance grew by more than 10% in the third quarter — rising to above $102,000 from around $93,000 in June — as the S&P 500 climbed 5.5%.

Despite rising balances, many said they were still living paycheck-to-paycheck. Among the 400,000 participants who completed a financial wellness assessment with Bank of America, nearly 60% reported this financial pressure, saying they didn’t have funds left over at the end of the month.

In Q3, the proportion of participants taking 401(k) loans decreased slightly to 2.5%, down from 2.7% in Q2. The average loan amount also fell, to $9,100 in Q3 from $9,300 in Q2. Hardship distributions saw a slight increase, rising to 0.72% in Q3 from 0.67% in Q2.

Most participants maintained their retirement savings habits, with the average 401(k) contribution rate ticking slightly higher and younger participants—like Gen Z and millennials—showing the greatest increases. The average 401(k) contribution dropped to $1,440 in Q3 from above $1,500 in Q2.