It’s a pretty terrible sign of the times when a record number of Americans are forced to plunder their 401(k)s.
“A record share of 401(k) account holders took early withdrawals from their accounts last year for financial emergencies,” reports the Wall Street Journal. “Overall, 3.6% of its plan participants did so last year, up from 2.8% in 2022 and a pre-pandemic average of about 2%.”
The whole point of a 401(k) is to keep that money out of reach until you reach age 59 ½ or above. Removing that money earlier is about the worst financial move anyone can make. The beauty of these retirement accounts is that 1) you defer your income tax on your contribution, and 2) you invest long-term and watch your money grow and grow over the decades.
More from WSJ: “Emergency distributions hit back-to-back record highs in 2022 and 2023, according to Vanguard, which administers 401(k)-type accounts for nearly five million people[.]”
