America’s financial downfall: Citizens now desperately raiding 401(k) plans to pay bills long before retirement
by: J. D. Heyes
Sunday, February 17, 2013
Is chronic, slow economic growth and rising poverty the new normal for America and Americans? Unfortunately, for an increasing number of people, the answer is yes.
According to recent reports, a large and growing portion of American workers who are having trouble making ends meet because of rising costs are being forced to raid their retirement accounts for non-retirement needs, “raising broad questions about the effectiveness of one of the most important savings vehicles for old age,” The Boston Globe said.
In fact, more than one in four – a staggering 25 percent of workers – with 401(k) and similar retirement savings accounts are now using them to pay current bills, new data indicates.
The monetary figure is alarming: A quarter of the $293 billion deposited in such accounts each year is now being drained via loans, withdrawals and out-right cash-outs, “undermining already shaky retirement security for millions of Americans,” the paper said.
The new normal – Faltering finances