The number of people making “hardship” or emergency withdrawals from their 401(k) plans is soaring despite low unemployment and rising real wages, a new report from Bank of America reveals. Withdrawals in the April-to-June second quarter leapt an astonishing 36% compared to the same three months a year earlier, the bank says, citing data from company benefit plans for which Bank of America keeps the records. Those plans cover four million participants, it says. Withdrawals had also risen 12% from the first quarter.
The number of people taking loans from their 401(k) plans also rose. The overall figures involved are still quite small: Just 0.52% of 401(k) participants, or roughly one in 200, took withdrawals during the second quarter. The number of account holders borrowing from their 401(k) was 2.5%. But the trend is ominous for the economy and for America’s retirement savings, because it comes during an almost unprecedented boom. The unemployment rate is currently just 3.5%, around levels typically associated with the Eisenhower or Johnson eras. There are five job openings for every three unemployed workers. The Bank of America data confirm a trend previously identified by investment giant Vanguard, which recently revealed that hardship withdrawals among its clients “hit a new high” last year after rising 42%. And the news on 401(k) withdrawals comes as the Federal Reserve reveals that consumer credit card debts have just topped $1 trillion for the fi …
Article Attribution | Read More at Article Source
The number of people taking loans from their 401(k) plans also rose. The overall figures involved are still quite small: Just 0.52% of 401(k) participants, or roughly one in 200, took withdrawals during the second quarter. The number of account holders borrowing from their 401(k) was 2.5%. But the trend is ominous for the economy and for America’s retirement savings, because it comes during an almost unprecedented boom. The unemployment rate is currently just 3.5%, around levels typically associated with the Eisenhower or Johnson eras. There are five job openings for every three unemployed workers. The Bank of America data confirm a trend previously identified by investment giant Vanguard, which recently revealed that hardship withdrawals among its clients “hit a new high” last year after rising 42%. And the news on 401(k) withdrawals comes as the Federal Reserve reveals that consumer credit card debts have just topped $1 trillion for the fi …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]