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Retirement Account Balances Drop 4% as Market Turmoil Spurs Early Withdrawals

Average 401(k) balances fell to $141,000 in the first quarter of 2026, marking a 4% decline. Fidelity Investments attributed the drop to severe market volatility tied to geopolitical tensions in Iran. Individual retirement account balances similarly declined 4% to $131,380 during the same period. The pullback coincided with increased account withdrawals as workers faced financial pressures requiring immediate cash access. Experts caution that early retirement account distributions lock in losses during market downturns and forfeit long-term compound interest benefits. Markets have since recovered, with the Dow Jones Industrial Average up 5.3% year-to-date, the S&P 500 gaining nearly 10%, and the Nasdaq Composite advancing 14% as conditions stabilized in recent months.