Record high 4.8% of 401(k) holders took hardship withdrawals in 2024 due to financial stress.

Vanguard’s 2025 report reveals a record high 4.8% of 401(k) holders took a hardship withdrawal in 2024, up from 1.7% in 2020. Reasons include avoiding foreclosure, medical expenses, and covering home repairs. Half of Americans have $500 or less in savings, leaving many with no emergency fund.

Some use hardship withdrawals for home repairs or tuition, but experts caution against raiding retirement savings. Vanguard notes that legal changes have made it easier to request withdrawals, including the Secure 2.0 Act of 2022, which could explain the increase in withdrawals overall. Vanguard remains optimistic about the 4.8% withdrawal rate.

Read more at Yahoo Finance: 4 Reasons People Are Using 401(k)s for Emergencies, According to Vanguard