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Retirement Planning > Retirement Investing

One-in-Five Workers Siphon Off Retirement Accounts

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Almost one-fifth of full-time workers have dipped into their retirement accounts to cover a financial emergency in the past 12 months. A survey released Monday by Bankrate found 19% of Americans and 17% of full-time workers borrowed from their retirement savings.

The report noted that while almost three-quarters of respondents did not turn to retirement savings to pay for an emergency, the problem may be that those who do feel there is no other option.

"People are turning to this as a last resort; they have exhausted their other resources," Greg McBride, CFA, senior financial analyst at, said in a statement. "At that point there is very little in the way of alternatives."

"In the short term, you might get 70 cents on the dollar by the time you figure in the taxes and early withdrawal penalty," McBride said. "Not only have you depleted your nest egg but this deals a permanent setback to your long-term retirement security, because there is no way to go back and replace those savings later. You don't get higher contribution limits to make up for the early withdrawals you've taken."

When asked about how comfortable they were with the amount of money they had saved, more respondents said they were less comfortable than they were last year. Comfort levels were especially low for respondents over 65, and students whose education ended at high school.

While nearly one-quarter of respondents in Bankrate's March survey said they were comfortable with the amount of debt they had, that number fell sharply to 18% in the April survey, and fully one-third of respondents said their overall financial situation is worse today than it was last year.

The survey results are especially troubling in light of signs of economic recovery.

"Despite data showing job creation, greater savings, lower debt burden, and rebounding household net worth, the new low in the FSI shows that people aren't feeling it," McBride added.


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