21 September 2018

Unemployed and Underemployed Accessing Retirement Funds Early

#
Share This Story

A recent study by Transamerica Center for Retirement Studies showed that more than a third of unemployed and unemployed have taken assets out of their retirement plan savings.

The study found that 35 percent of unemployed workers and 36 percent of the underemployed workers have taken early distributions from their retirement plan accounts.

Not surprisingly, the numbers increase for those who have been out of work or underemployed for longer periods. For those who have been unemployed or underemployed for less than a year, 23 percent reported they had withdrawn funds from their retirement accounts. For those who have been out of work for more than a year, 42 percent have taken money out of retirement savings.

The numbers are higher for those who participated in a 401(k) or similar plan at their most recent employer. Forty-three percent have taken withdrawals from their accounts, including 53 percent of the unemployed and 38 percent of the underemployed.

Additionally, the survey found that the majority, 55 percent, have also taken money from personal savings and 36 percent were using their credit cards to pay bills.

Among those surveyed, the median household savings in retirement accounts was $7,500, with those in their 20s and 30s holding an average of $5,800 and those in their 60s holding a median of $93,000.

When looking for a job, only 17 percent of those surveyed said they are seeking generous retirement benefits. Fifty-six percent of the unemployed or underemployed job-seekers said that competitive pay is one of their top three most-important job characteristics, followed by company stability (33 percent) and a convenient commute (31 percent).

The report stated, “…leakage from retirement accounts was more likely out of necessity vs. a lack of awareness of the consequences: 80 percent of those with a retirement account said they were familiar with the taxes and penalties associated with taking an early withdrawal.”
Join Our Online Community
Join the Better Way To Retire community and get access to applications, relevant research, groups and blogs. Let us help you Retire Better™
FamilyWealth Social News
Follow Us