Americans are tapping into their 401(k)s like never before

For decades, 401(k)s have been a staple of US retirement savings, designed to sit as untouched nest eggs that workers build up for their golden years. However, that idea is starting to crack, as more and more Americans are tapping into the assets — which were worth a collective $8.9 trillion in 2024 — earlier and more often, sometimes just to get by.

According to a recent Bloomberg report, early withdrawals from 401(k)s to cover urgent financial needs are now running 15% to 20% above the historical norm, per data from Empower, the second-largest retirement plan provider in the US. These so-called “hardship withdrawals” are granted when people are facing “immediate and heavy” expenses, including medical bills, tuition, or payments to avoid eviction or foreclosure.

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