Americans are raiding retirement savings during coronavirus pandemic

[Demovictory9]

As households struggle to make ends meet, more Americans have been forced to halt or raid their retirement savings in this coronavirus-induced recession.

Nearly 3 in 10 people have decreased the amount of money they’re setting aside for retirement or stopped saving altogether due to the economic fallout of Covid-19, according to a FinanceBuzz survey published in August.

A large share of consumers have also pulled money out of savings.

Around 30% of retirement savers tapped their retirement accounts over the last 60 days, according to a MagnifyMoney survey published in May. Those consumers pulled out $6,757, on average.

Just over half withdrew money in order to cover expenses and 26% did so because of a job loss, according to the survey, which polled 1,239 Americans with retirement accounts.

https://www.cnbc.com/2020/09/14/americans-are-forced-to-raid-retirement-savings-during-the-pandemic.html

[Sherman A1]

1. Sad, but hardly a surprise.

I’m lucky in being retired and not needing to do so and talking with a close friend who is still working I find she is busy paying down her mortgage shortly then going to build her nest egg.

[Leith]

2. That's all they have

And when that runs out, they're SOL. rethugs don't have anything for them.

[bdamomma]

3. the great divide

between those who have, and those have nots.

So sad.

[progree]

4. And usually one has to pay income tax on the amount withdrawn, +10% penalty if under age 59.5

But there is a bit of a break in 2020 according to the OP's CNN article:

Savers adversely affected by the coronavirus can withdraw up to $100,000 from these accounts in 2020 without the typical 10% tax penalty. (They’d still have to pay income tax, but it can be spread over three years.)

A lot of 401k plans let you borrow from them ... might be a better option than outright withdrawing from them.

[sl8]

6. Regarding the 401k self loans ...

Somone I used to work with had taken out a loan a couple of months before the 2007-2009 recession started.

While my 401k dropped ~ 60%, theirs hardly changed. Obviously, the money wasn't in their account for a couple of years, but they had full use of it.

It's hard to predict drops like that, though.

[Wounded Bear]

5. The money has to come from somewhere...