After many years of trying, I had high risk pregnancies back to back. Used ALL my time through my emplower (plus nearly 3 weeks of unused vacation time that had rolled over) keeping my son inside. When my daughter came along, there was no time left.
We had plenty of money saved and next to nothing on credit cards. I went part-time to increase her chances of survival, since we had enough saved to make up the difference until I could get back on my feet. Then a series of disasters hit. My husband was injured at work and needed surgery, then my son needed surgery, and then my daughter was two months premature. By the time she was born, our bank account was nearly cleared out. We had 4 nest eggs when another $67K in bills landed in our lap.
Breaking those nest eggs was definitely a hardship withdrawal. We took those hits because we had no choice. We've been laboring under years of debt because additional medical bills just kept coming. I'm not complaining, I'm just pointing out that it's very possible that gainfully employed, frugal folks can still be struggling through no fault of their own.
Over two years ago, a friend of mine lost his job of 27 years as a top level IT exec at a bank. He sent out nearly 700 resumes, all across the country, looking for work. They, too, were frugal folks who saved, saved, saved. His wife went back to work full time, but after months of struggling to maintain their house, cars, kids in private school, life had to change. They cut every corner, hopeful that a new job for John was just around the corner. When he finally got a job, it was making $12 an hour, not the $120K they were used to, but it came with benefits.
The company decided to nix the project his group was working on because the market is so soft. He's back to unemployment again. And there went a nest egg while they hang on.
My husband and I have, collectively, about $180K in retirement savings. We no longer have anything set aside for college for our kids, definitely not enough to retire on, and less than $2K in our bank account. We pay out debts, take care of our babies, and don't ask anyone (especially the government) for anything. And we will be working until the day we die.
The first wave of foreclosures in 2008 were the folks who had little or nothing saved for a rainy day. The second wave - and it is coming - will be people who used up all their rainy day savings and their storms dragged them under.
My remark was not about any specific person, however, but about the nation in general. As a nation, we've been saving no more that 1-2% for twenty years. As a nation, we've been withdrawing the equity in our houses at the rate of 8% in 2000s --- to remodel kitchens and bathrooms. As a nation, we've been upgrading our LCD TVs every couple of years. That is what the statistics reflect: the averages.