Data from Vanguard shows Americans are pulling money out of their retirement accounts early at record rates to help make ends meet.
Last year, 6% of Vanguard’s clients took a hardship withdrawal, which allows them to access funds in tax-advantaged retirement accounts, such as a 401(k), before they reach retirement age. That was up from 4.8% in 2024, the asset management giant said.
Taking a hardship withdrawal is not ideal for a few reasons, one of them being that investors are subject to a withdrawal penalty of 10% for taking money out of their account before 59½. On top of that, they are then taxed on any gains. However, perhaps most importantly, they rob themselves of future growth potential on that money, especially if they are still far from retirement age.
I remember my dad emptying his retirement savings in the wake of '08. Super fun to be experiencing all this again. Troops in the middle east for extra nostalgia.
Must be fake news. Trump himself said usa does better than ever. Prices down, afordability up, gas almost free, more jobs, more profit, all
warsspecial ops won in a day and foreign countries pay for all that via tariffs /sBoomers traded stable pension funds (minus the occasional embezzlement scandal here and there) for funding your retirement based on gambling in the stock market…
My parents are getting rekt right now…
A boomer should have very little money in stocks at this point since they’re so volatile. As you get closer to retirement, its better to transfer your investments to something more stable like bonds.
You will own nothing. You won’t even be happy. You just own nothing.
I had to do this once. Had car issues due to running over a crowbar that somehow bounced up and hit my car. I heard and felt the impact, saw smoke in my rear view mirror, and immediately pulled off the highway into a parking lot. I got out and a soon as I turned the car off all of the oil poured out. The oil pan got ripped, and later found out the engine got damaged.
Mechanic and insurance both decided it was least expensive to spend $9k parts and labor to replace the engine rather than total the car. I had to pay $3,000 for the deductible. Being young, renting, and making $11/hr, I didn’t have that kind of savings. I did have the money in my 401k.
My 401k allowed me to take a loan out against my 401k. It would get deducted out of my paycheck each week until it was paid off. The advantage to this was there was no interest, but I did have to pay a 10% penalty for early withdrawal, so I ended up having to take out more than $3k to cover the penalty.
Only other catch was if I quit or were fired before repaying the full amount the remainder of the balance was due the next month - and I was close to quitting to change careers. A few months later got a much better job in IT but could not repay the loan amount, so I “defaulted” on it which isn’t as bad as it sounds. The loan amount just gets reported to the IRS as income, and I had to pay taxes on the full amount in addition to the penalty.
Not ideal at all, but being young-ish and only having the option to try and get a loan from a traditional lender at a much higher interest rate would have been worse.
When I took a 401k loan, you paid yourself back at 5% interest I believe. That makes up (mostly) for having the money you borrowed out of you portfolio. You should not have had to pay the 10% penalty size you didn’t take a distribution.
Really sucks for them because the market has been fucked to hell by trump and his anti-Epstein-attention event
Before Trump finds a way to siphon them dry no doubt. Also,people are out of work and under paid
All part of the plan. Work until the janitor finds you at your desk, Slave!
