Story perspectives

Record 6% of Americans Tap 401(k)s Amid Financial Strain

3/6/2026

Summary

Americans Withdraw 401(k)

According to Vanguard, a record 6% of Americans with 401(k) plans made hardship withdrawals in 2025, up from 4.8% in 2024.
The rise reflects increasing financial stress, with many Americans withdrawing funds to avoid eviction or cover medical expenses.
Legislation changes have made it easier to access 401(k) funds, including provisions for domestic abuse victims.
Despite rising withdrawals, 401(k) balances increased by 13% due to strong market performance.

Summary

Americans Boost 401(k)

In 2025, average 401(k) balances rose over 11% to about $146,000, helped by steady contributions and a strong market rebound.
The number with more than $1 million rose to 665,000, led primarily by Generation X.
A Northwestern Mutual survey shows Americans believe they need $1.26 million for a comfortable retirement, revealing a savings gap.
IRA contributions rose 25% in 2025, signaling a shift toward diversifying retirement income.

History

Historical Context

The 401(k) Reform Act of 2001, part of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), enhanced retirement savings options by raising contribution limits and introducing features like the "catch-up" provision for older workers. By 2025, IRA contributions surged by 25%, reflecting a shift in retirement strategies amid rising financial stress, as hardship withdrawals increased from 4.8% to 6%.

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Americans Withdraw 401(k)

According to Vanguard, a record 6% of Americans with 401(k) plans made hardship withdrawals in 2025, up from 4.8% in 2024.
The rise reflects increasing financial stress, with many Americans withdrawing funds to avoid eviction or cover medical expenses.
Legislation changes have made it easier to access 401(k) funds, including provisions for domestic abuse victims.
Despite rising withdrawals, 401(k) balances increased by 13% due to strong market performance.

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