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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsMore than 25% of Americans raiding 401(k)s to pay bills
By Shan Li
March 7, 2013, 10:40 a.m.
More than 25% of Americans are dipping into 401(k) retirement accounts to pay for bills.
U.S. workers are tapping into nearly a quarter of the $293 billion placed into their retirement savings each year to pay for mortgages, credit cards and other debts, according to a report from financial advisory firm HelloWallet. Those in their 40s are the most frequent raiders, with about one-third using their 401(k)s to pay for current bills.
Other studies bear out those results. Vanguard, an investment management group, said that Americans workers withdrawing money from 401(k)s or taking out loans against their accounts jumped 12% since 2008.
Draining funds that ensure security when workers retire has raised new worries about the shaky foundation for older Americans.
Many workers use loans that incur large penalties to dip into retirement accounts. In addition to paying income taxes, many are hit with a 10% tax penalty.
more
http://www.latimes.com/business/money/la-fi-mo-retirement-401k-bills-20130307,0,5856839.story
Skink
(10,122 posts)taking it when markets are at historic lows good too. So now might not be the best time.
upaloopa
(11,417 posts)Maybe you are referring to interest rates
DJ13
(23,671 posts)What a perfect time for the President to propose a chained cpi formula.
sadbear
(4,340 posts)Last edited Thu Mar 7, 2013, 07:41 PM - Edit history (1)
I suspect that number's not very big.
progressoid
(49,988 posts)silverweb
(16,402 posts)[font color="navy" face="Verdana"]His company shut down after he'd been with them for 20 years. He's now in his late 50s and has been unable to find another job, and his unemployment ran out. All he has left is his 401K, which lost 2/3 of its value in the crash. That's what he's living on, just hoping he can make it last until Social Security kicks in.
denverbill
(11,489 posts)This is one of the biggest problems with 401Ks, there being many.
1) Workers can withdraw money early to buy a house. Or they can pay a penalty and withdraw it early.
2) The stock market tends to go down frequently, almost as often as it goes up. That can devastate retirement plans
3) Workers aren't required to put money in 401Ks, and many workers don't (or can't) put in enough to retire on.