Source: Daily Mail
Millions of Americans were forced to dip into their retirement savings last year in a worrying sign of financial strain.
A record 6 percent of workers with 401(k) plans administered by Vanguard made so-called hardship withdrawals in 2025 - the highest level ever recorded.
Tapping into retirement savings is a last-resort decision when times get tough, and that was the reality for a significant portion of 401k participants last year.
Considered a last resort, hardship withdrawals allow access to retirement accounts early when savers face severe financial pressure, such as avoiding eviction, foreclosure or paying medical bills, or lose their job.
The figure is up sharply from 4.8 percent in 2024 and roughly three times the typical rate seen before the pandemic, when about 2 percent of savers tapped their retirement funds.
With around 60 to 70 million Americans holding active 401(k)s, the data suggests as many as 4.2 million made hardship withdrawals last year. That is roughly the equivalent of every resident of Oregon draining part of their pension pot just to get by.
Most hardship withdrawals were relatively small. Vanguard said the median amount taken out was $1,900.
The most common reasons included avoiding foreclosure or eviction and paying urgent medical bills.