07.26.25

Americans See Their 401(k)s Not Just as Nest Eggs but as Rainy Day Funds

by: Anne Tergesen

A growing number of Americans are withdrawing money from their 401(k)s, reshaping retirement accounts into emergency funds. Vanguard reports that 4.8% of workers took hardship withdrawals in 2024, and nearly one-third of job changers cashed out entirely, often paying penalties. Laws easing access for hardships and emergencies have fueled this trend, while automatic enrollment has drawn more hourly workers facing income volatility into 401(k)s, where they cash out at higher rates. Experts warn such “leakage” could greatly reduce retirement wealth. Employers are adding emergency savings features to help prevent withdrawals and strengthen long-term financial security for workers.

Read the full article on The Wall Street Journal