401(k) last resort withdrawals climb as experts warn of future hardship Boston 25 News [Video]

BOSTON — A growing number of Americans are making emergency withdrawals from their 401(k) retirement plans as inflation remains high.

While some 401(k) plans make it possible to take cash out for an emergency, the step comes with consequences.

Nearly 3.6% of workers participating in employer-sponsored 401(k) plans made a so-called ‘hardship’ withdrawal in 2023.

That’s according to one of the largest US retirement plan providers Vanguard, which tracks about 5 million accounts.

The statistic breaks down to about 180,000 of their customers dipping into their savings last year alone.

The Internal Revenue Service allows withdrawals in circumstances of “immediate and heavy financial need.”

This includes events such as flood damage to your home, avoiding eviction, or a substantial medical bill.

“People don’t really plan for the future,” said Virginia Pratt of Jamaica Plain. “A lot of people get to the age of retirement. They suddenly realize, wait a minute, …