Despite the recovery, more workers are borrowing from 401 (k) s

401k_630x420 Statistics on household finances U.S. is so amazing it deserves its own post: Almost one in three employees say they took a loan difficulty or distribution of your 401 (k) retirement accounts last year, compared with one in four in 2011. Given that loans and hardship distributions can trigger penalties or other costs, this is an expensive proposition.

Then there are the residual effects: Borrowers lost in investment earnings, as the big market rally in the last four years, and, as Nick Summers and I reported in our financial planning Mega flow-chart is prudent to shore retirement savings before you pay for other things, like buying a house or saving for a child’s education.

To understand what is driving the increasing desperation, even though the U.S. economy recovers, which helps break down the data (PDF)? The financial firm behind the study of education, Financial Finesse, Bloomberg Businessweek provided with additional statistics showing three groups struggling more than others:

Women. Thirty-four percent of workers said they took 401 (k) loans and distributions of hardship, compared with only 23 percent of men, a gap wider than in 2011.

Lower income employees. Forty-five percent of employees who earn between $ 35,000 to $ 60,000 said they had to resort to their 401 (k) s, compared with 11 percent of those earning more than $ 200,000.

Younger workers. Those aged 30 to 44 reported a large increase in loans and distribution difficult, going from 27 percent in 2011 to 37 percent in 2012.

If these trends continue depends on how much the economy recovers. If still growing unevenly, more Americans will have to attack their retirement funds to make ends meet.


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