Fidelity: More Workers Taking Money From 401(k)s to Pay Bills

Fidelity: More Workers Taking Money From 401(k)s to Pay Bills

While retirement savings behaviors remain strong, Fidelity Investments® reported an uptick in hardship withdrawals and 401(k) loans in its Q3 2023 retirement analysis as workers struggle with short-term financial challenges.

By the numbers:

  • In Q3, 2.3 percent of workers took hardship withdrawals, up from 1.8 percent in Q3 2022. The top two reasons behind this uptick were avoiding foreclosure/eviction and medical expenses.
  • 2.8 percent of 401(k) participants took a loan, compared to 2.4 percent in Q3 2022. The percentage of workers with a loan outstanding has increased slightly to 17.6 percent, up from 17.2 percent last quarter and 16.8 percent in Q3 2022.
  • Hardship withdrawals are allowed for large, unexpected expenses. Unlike a 401(k) loan, the funds need not be repaid, but you must pay taxes on the amount of the withdrawal.

Bottom line: Fidelity says retirement balances are up over a year ago and savings rates remain steady and strong.

  • Companies are also finding ways to help employees deal with unexpected expenses that can derail saving for retirement.

Published by

Darryl Hicks

Darryl Hicks is Vice President of Communications for the National Reverse Mortgage Lenders Association. In this capacity, Hicks writes for NRMLA's publications, manages the association's web sites and social media accounts, assists committees and the Board of Directors, and manages the Certified Reverse Mortgage Professional designation. Prior to joining NRMLA in 1999, Hicks spent three years in the Washington, D.C. bureau for National Mortgage News.