28% of Workers Dip Into Retirement Funds Amid Pandemic

thebalancemoney.com:

The United States isn’t known for offering a secure retirement, and the pandemic isn’t helping. More than a quarter of workers have taken or plan to take a loan or withdrawal from their retirement accounts because of the pandemic, according to a June survey from the Transamerica Center for Retirement Studies. At the same time, Social Security funds have taken a hit, lowering the funds’ reserves even further.

“Millions of people have been very hard hit by the pandemic, and I can see the need to dip into retirement savings,” said Patti Vogt Rowey, vice president of Transamerica Institute. Rowey also acts as a retirement and market trends expert for the Transamerica Center for Retirement Studies. “But certainly those who do have the means should continue to save.”

Though the economic turmoil resulting from the pandemic has given people a reason to use their retirement savings during their working years, it’s not unusual for them to do so. About a third of American workers make early withdrawals or take loans from their retirement funds each year, according to the last few years of the Transamerica Center for Retirement Savings annual retirement survey. 

While it’s not uncommon for people to take a hardship withdrawal from a 401(k) or similar plan, Rowey said she believes COVID-19 has “exacerbated” these circumstances. 

Transamerica’s survey of 1,260 U.S. adults showed 28% have either already taken out a loan or early withdrawal from a 401(k), IRA, or similar retirement account, or plan to do so. 

Millennials were more likely than those older generations to dip into their retirement savings, with 37% of millennial workers saying they had or plan to do so. (The organization conducted the survey in June and