Some 4.8% of account holders took early withdrawals last year for reasons such as preventing foreclosure and paying medical bills. That is a record high, up from a prior record of 3.6% in 2023 and a prepandemic average of about 2%. The 401(k) has become a rainy-day fund because more employers are automatically enrolling their workers, including people that otherwise have little savings. Congress has also made it easier to use retirement savings for emergencies.
“While experiencing hardship is not a good thing, having savings to turn to is a positive,” said David Stinnett, head of strategic retirement consulting at Vanguard.
