Pandemic Sparks ‘Significant’ Withdrawals from Retirement Accounts

The pandemic has prompted a high number of Americans to take money out of their retirement accounts, according to a recent study. 

How high? Kiplinger and Personal Capital report that they found in their recent study that 60% of Americans have borrowed or withdrawn funds from their 401(k) or IRA during the pandemic. 

And those withdrawals and loans were hefty, the study says. Almost one-third of the respondents took who made withdrawals took at least $75,000, and that loans were between $50,000 and $100,000 for a majority of those who borrowed from their accounts.

A majority of those who took money out of their retirement accounts did so simply to pay for basic living expenses, the report says. Among those uses were the following: 

Effect on Saving 

The report shows that the pandemic has affected saving and expectations. Two-thirds of respondents said they have changed their retirement plan due to the pandemic. Interestingly, despite the pandemic and the high percentage of respondents who took money from their accounts, a majority of respondents still evinced some optimism: 

• 57% were as or more confident that they will be able to live comfortably in retirement, while 43% were not. 
• 53% are saving the same amount they were before the pandemic;
• 43% still expect to retire at the normal age for full retirement; and
• 42% of those with an unchanged savings rate expect to live 20 to 29 years after retiring. 

About the Respondents

Respondents were between the ages of 40 and 74, the median age was 51, and 32% were between the ages of 40 and 44; they comprised the largest age group among the respondents. A strong majority—86%—were employed, at least part-time, and 76% were married. 

Two-thirds of the respondents had accounts in an employer-provided plan; 37.4% had an IRA, and 29% had a Roth IRA. Their median retirement savings were just under $190,000; their median household income was $119,000 and median household net worth was $321,000.