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The Real Cost of 401k Withdrawals

Unfortunately, a large chunk of Americans put themselves under undue financial stress for a quick and easy loan.

By Adam Potter | Updated on March 15, 2015
Adam Potter

Life happens. Moments of financial need are simply unavoidable – a quick source of cash seems to be the best or only option. Unfortunately, a large chunk of Americans are continually putting themselves under undue financial stress for a quick and easy loan.

In 2013, 33% of Americans borrowed from their retirement account, up from 25% in 2012. This upward trend in retirement withdrawals has not decreased, and a recent Hartford study showed that 66% of millennials accessed their retirement savings in 2014. That’s an indication that the rising generation does not view this account as sacred, posing a problem to employers and the U.S. economy alike.

Two factors are primarily responsible for this rise in retirement fund borrowing: Stricter lending criteria have made it harder to access capital through traditional means, and technology has enabled account access like never before.

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