04 Jul Who’s Tapping Their 401(k) to Pay Off Debt?
Too many workers are using their 401(k) savings plan as a piggy bank, tapping it way before retirement for reasons such as to pay off debt, remodel their home or take a vacation they couldn’t otherwise afford.
New research from the financial services company TIAA-CREF finds that one-third of 1,000 Americans surveyed in May have taken out a loan from their retirement savings plan. And 44 percent say they now regret it. The survey looked at what situations caused workers to tap those funds.
Not everyone borrowed from a retirement plan to visit Bora Bora. Getting out of debt was cited as the top reason (46 percent), followed by paying for an emergency (35 percent), funding a home purchase or renovation (26 percent), paying everyday bills after a job loss (24 percent), bankrolling education costs for children or for themselves (20 percent), and paying for a family vacation or special event like a wedding (15 percent).
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