From Yahoo Finance: 2025-04-06 07:42:00

More Americans are turning to their 401(k) as an emergency fund, with a 4.8% increase in hardship withdrawals in 2024. Economic trends from the previous year show growth but 2025 may bring a possible recession. Experts warn against tapping into retirement savings unless it’s a last resort, suggesting considering other income sources first.

If considering a hardship withdrawal, explore all alternatives first, such as selling assets or taking on a side gig. Consult with a financial advisor to weigh the pros and cons. Another option is a 401(k) loan, but not all plans offer this. Understand the tax implications and potential penalties before making a decision.

Read more: Vanguard finds more Americans are treating their 401(k)s like emergency funds