Posted on 08/08/2023 4:16:44 PM PDT by Diana in Wisconsin
More Americans are tapping their 401(k) accounts because of financial distress, according to Bank of America data released Tuesday.
The number of people who made a hardship withdrawal during the second quarter surged from the first three months of the year to 15,950, an increase of 36% from the second quarter of 2022, according to Bank of America’s analysis of clients’ employee benefits programs, which are comprised of more than 4 million plan participants.
It’s a “pretty troubling” development if more people are resorting to making hardship withdrawals, Matt Schulz, chief credit analyst at LendingTree, told CNN.
“You understand why people do that in the heat of the moment, but the opportunity costs on that are really, really high over time,” he said.
Bank of America’s latest Participant Pulse report also found that a greater percentage of participants borrowed from their workplace plans from the first quarter, and average contributions trailed off as well.
However, overall employee contributions continued to hold steady for the first half of the year, and a greater share of participants upped their contribution rate than decreased it.
“The data from our report tells two stories — one of balance growth, optimism from younger employees and maintaining contributions, contrasted with a trend of increased plan withdrawals,” Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America, said in a statement. “This year, more employees are understandably prioritizing short-term expenses over long-term saving.”
While the labor market remains strong, the economy is growing and consumers are spending, the global pandemic followed by two years of persistently high inflation have taken their toll on household finances.
Since 2019, household debt balances have increased by nearly $3 trillion, according to New York Federal Reserve data through the first quarter of 2023.
(Excerpt) Read more at channel3000.com ...
When Brandon’s Economic Ponzi Scheme finally collapses, it’s going to be spectacular!
*SPIT*
Build back better
did they miss the stats that the baby boomers are retiring and the MDA's are due? Minimum desperations?
RE: withdrawals of money....
Remember Jeff Foxworthy’s quip:
On Mama’s birthday and Christmas list every year:
1) Ammo
2) Ammo
3) Ammo
I don’t remember people having to do this 4 years ago.
I texted both my daughters after reading about that earlier in the day. They say they payoff their credit cards monthly. I hope that’s the case. I don’t pay mine off monthly. I just use a debit card for everything. There’s a lot of people that are having their credit card interest rates jacked. You don’t want that happening with a big balance.
We need the wisdom of Sen. Fetterman.
Credit card debt will be the new student loan to be forgiven.
“I don’t remember people having to do this 4 years ago.”
What’s even MORE surprising is that it’s being reported - and by CNN no less! ;)
Let’s Go, Brandon! *SPIT*
Cashed out the 401k and used it to pay off credit cards last year.
I’m guessing medical expenses? That’s what sinks most of us. :(
Bidenomics
“Credit card debt will be the new student loan to be forgiven.”
I’d better go shopping, then! (J/K!)
Generally, they can't Jack the rates on existing balances, only future purchases. At least that was the way it was with all the cards I had in the past where, due to stupidity, I carried balances.
That’s what got me.
Three rounds of hospitalization ranging from a few days to three weeks plus all the stuff insurance partly or didn’t cover and some emergency ambulance services almost sunk me.
I had essentially four major bills after final surgery,
Three are paid off.
Now the 4th and largest is now at least really doable with super tight budgeting.
.
They have to eat!🥴
Bidenomics !
4/10ths of one percent of the accounts made hardship withdrawals. OMG! Let me know when it gets to 1%.
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