A Quarter of Adults Dip Into Retirement Funds

Top reason for those under 35: home down payment.


According to this study, one quarter of adults have prematurely withdrawn money from their retirement fund—such as a 401(k) or individual retirement account. What's more, 45 percent of those surveyed say they either can't pay back the money or have not begun to do so.

The survey results show that most people don't start dipping into retirement savings until age 35, and the most common reasons given were a down payment for a home and either the respondent or a family member losing a job. Not surprisingly, the majority of respondents making early withdrawals earn less than $50,000. Among those under 35, a home down payment was the top reason for making a withdrawal. Other reasons included credit card payments, losing a job, education expenses, mortgage payments, overspending, and paying for an event, such as a wedding.

According to this Wall Street Journal story, the number of workers prematurely tapping their 401(k)'s is growing. It's a dicey idea, and here's why. The basic idea is that if you take the money out now, it can't work its tax-free compounding magic. Check out this calculator for a better idea of how much you stand to lose.