MNeagle
20th August 2010, 06:03 AM
A Record Number Of Workers Could Be Burning Away Retirement Savings Just To Survive
http://static.businessinsider.com/image/4c6e58ff7f8b9af828e10b00/burning-money.jpg
During the housing boom, Americans frequently took out home equity loans to fund consumption, tapping the so-called home equity ATM.
With the housing run-up over, that's been pretty much tapped out.
No worries, now we have the 401(k) ATM.
According to Fidelity, the Boston-based investment management giant, record numbers of its clients have been withdrawing money from 401(k) retirement plans. Fidelity is one of the largest investment managers, thus its client trends could be representative of the U.S. at large.
CNBC:
Among the 11 million workers whose 401(k) plans are run by Fidelity, 11 percent took out a loan from their plan during the 12 months ended June 30, the company said, up from 9 percent at the same point a year earlier.
By the end of the second quarter, plan participants with loans outstanding against their 401(k) accounts had reached 22 percent versus 20 percent a year earlier.
Hardship withdrawals were also on the rise, although in absolute terms remain quite low.
During the quarter, 2.2 percent of Fidelity's active 401(k) participants took a hardship withdrawal, up from 2 percent a year earlier, and another peak, Fidelity said. Often those withdrawals were used to prevent foreclosure on a home or pay college tuition.
Note Fidelity is referring to workers, not the retired, but at least these clients have retirement savings, there's also a swath of Americans with little to none. So in a dark sense, they're 'lucky' to have savings to burn.
http://www.businessinsider.com/a-record-number-of-americans-are-running-down-their-retirement-savings-to-live-2010-8#ixzz0x9ALAcc8
http://static.businessinsider.com/image/4c6e58ff7f8b9af828e10b00/burning-money.jpg
During the housing boom, Americans frequently took out home equity loans to fund consumption, tapping the so-called home equity ATM.
With the housing run-up over, that's been pretty much tapped out.
No worries, now we have the 401(k) ATM.
According to Fidelity, the Boston-based investment management giant, record numbers of its clients have been withdrawing money from 401(k) retirement plans. Fidelity is one of the largest investment managers, thus its client trends could be representative of the U.S. at large.
CNBC:
Among the 11 million workers whose 401(k) plans are run by Fidelity, 11 percent took out a loan from their plan during the 12 months ended June 30, the company said, up from 9 percent at the same point a year earlier.
By the end of the second quarter, plan participants with loans outstanding against their 401(k) accounts had reached 22 percent versus 20 percent a year earlier.
Hardship withdrawals were also on the rise, although in absolute terms remain quite low.
During the quarter, 2.2 percent of Fidelity's active 401(k) participants took a hardship withdrawal, up from 2 percent a year earlier, and another peak, Fidelity said. Often those withdrawals were used to prevent foreclosure on a home or pay college tuition.
Note Fidelity is referring to workers, not the retired, but at least these clients have retirement savings, there's also a swath of Americans with little to none. So in a dark sense, they're 'lucky' to have savings to burn.
http://www.businessinsider.com/a-record-number-of-americans-are-running-down-their-retirement-savings-to-live-2010-8#ixzz0x9ALAcc8