“More than 25% of Americans are dipping into 401(k) retirement accounts to pay for bills.”
~The Los Angeles Times, March 7, 2013
More people are raiding their 401(k)s than ever before, but not for retirement. According to CNBC’s report of a HelloWallet study, one in four Americans are borrowing from retirement accounts to pay bills, such as their mortgage, college tuition, even credit card payments.
More than $70 billion is being withdrawn annually from retirement accounts. And the troubling trend seems to be on the upswing.
Citing a report from Wells Fargo, Bloomberg News noted in April of 2013, “The number of people taking loans from their 401(k) retirement accounts increased 28% in the fourth quarter from a year earlier as older workers tapped their savings.” According to the report, people in their 50s were the most likely to borrow against their retirement savings.
While noted as an alarming problem by financial experts, the rampant borrowing from retirement accounts is actually a symptom of two larger problems. The first is plain enough: American’s haven’t saved enough.