401(k)s Raided at Record Pace

Retirement planner graph with money glasses hourglass — RETIREMENT FUNDS RAIDED

America’s hardworking families are raiding their 401(k) retirement savings at record rates, desperately tapping into future security to survive the lingering economic wreckage from years of Biden-era inflation and fiscal recklessness.

Story Snapshot

Record 6% of Vanguard 401(k) participants took hardship withdrawals in 2025, up from 2% before the pandemic.
Median withdrawal of $1,900 used for evictions (36%), medical bills (31%), and tuition (13%), signaling deep financial distress.
Irreversible penalties and taxes erode retirement nests, cutting long-term assets by an average of 25% due to lost compounding.
Despite average balances rising to $168,000 from stock gains, median U.S. retirement savings remain a pitiful $1,000.
Trend persists into 2026 under President Trump’s watch, underscoring need for policies promoting personal responsibility and emergency savings.

Record Surge in Hardship Withdrawals

Vanguard’s 2026 “How America Saves” report documents 6% of participants taking hardship withdrawals in 2025, the highest ever. This marks a steady climb from 2% pre-2020, 2.8% in 2022 amid 6.5% inflation, 3.6% in 2023, and 4.8-5% in 2024.

Fidelity reports mirror the trend, doubling from 2% in 2018 to 5% in 2024. These irreversible moves, unlike stable loan rates, reflect families stretched thin by rising costs and eroded wages.

Root Causes Tied to Past Policies

Inflation peaking at 6.5% in late 2022, three times pre-pandemic norms, crushed real wages by 1.7% yearly, while household debt, including credit cards, surged 15% to post-2008 highs. Savings rates fell to 3.4%.

IRS rules under ERISA allow withdrawals for immediate needs such as housing or medical expenses, but expansions under the CARES Act and SECURE 2.0 have normalized access. Workers lacking three months’ emergency funds face twice the risk of withdrawal, hitting low- and middle-income households hardest.

Devastating Consequences for Retirement Security

Median withdrawals hit $1,900, providing short-term relief from eviction or illness but triggering taxes and 10% penalties for those under 59½. Long-term, early withdrawals slash retirement assets by 25% due to forgone compounding, per a Boston College analysis.

Despite average 401(k) balances climbing 13% to $168,000 by the end of 2025 due to stock gains and auto-enrollment, median savings stagnate at $1,000, per the 2026 NIRS report. This gap exposes systemic under-saving amid prior fiscal mismanagement.

A record number of Americans tapped into their 401(k) retirement savings for hardship withdrawals last year due to financial challenges, new data shows. https://t.co/XFXvC4X93l

— FOX 5 DC (@fox5dc) March 7, 2026

Vanguard tracks 5 million accounts, where 6% acted in 2025. Top reasons—eviction/foreclosure at 36%, medical at 31%, tuition at 13%—underscore everyday struggles.

Experts like Fiona Greig note that families “feeling the pinch,” while Jeff Clark urges building emergency funds rather than raiding nests. Consensus favors loans or savings first to avoid permanent damage.

A record share of Americans are taking emergency withdrawals from their 401(k)s. https://t.co/kvozxbNtS2

— CBS News (@CBSNews) March 6, 2026

Path Forward Under Trump Administration

President Trump’s focus on economic revival promises relief from the scars of inflation, promoting policies that bolster individual liberty and family financial independence. Auto-enrollment lifted savings rates for 45% of people in 2025, yet low median balances persist.

Vanguard and Fidelity data, while plan-specific, align across sources with minor rate variances. American workers deserve tools for self-reliance, not government overreach that fueled this crisis—Trump’s common-sense approach prioritizes secure borders, spending restraint, and prosperity for retirees.