Scary! None of us will be able retire or even get social security!
More Americans are breaking into their 401(k) nest eggs than ever before, according to a new report by consulting firm Aon Hewitt.
Experts warn that employees weren’t saving enough to begin with and that the steady outflow of funds is putting the retirement savings of millions of people at risk.
“The idea was to make the plans flexible and give people access to their money earlier,” said Barbara Hogg, a retirement expert with Aon Hewitt, tells The Fiscal Times.
“That gives people a really hard choice between trading future dollars for future spending and meeting immediate needs. With the financial crisis, we see people dipping in.”
According to the report, 42 percent of employees with defined-contribution plans who lost their jobs in 2010 cashed out their 401(k)s entirely. Less than 30 percent rolled their assets over into an IRA.
Approximately 7 percent of 401(k) holders — 2 percent more than before the recession — withdrew some funds from their accounts in 2010. Almost 28 percent took loans directly from their accounts, 6 percent more than before the recession.
Twenty percent of those withdrawals were for financial hardship, half of which were made because accountholders were facing eviction.
The San Francisco Bay View reports that, with 10,000 foreclosures filed every day in the U.S. and banks refusing to work with homeowners or tenants, the number of evictions is likely to rise.
According to the Woodstock institute, over 99 percent of homes lost to foreclosure since 2008 have gone back to the lender and not to a family.