More concerning news coming out of the pandemic.
Among all U.S. adults that currently have a retirement account, or have had one in the past, 51% have withdrawn money prior to retirement, according to a recent Bankrate survey.
It includes 31% that had done so prior to the pandemic, 12% that have done so during the pandemic, and 8% that have taken a pre-retirement withdrawal both prior to and during the pandemic.
“Just 21% feel they are on track for where they should be in terms of retirement savings”
Bankrate
Illustrating the financial toll and potential long-term ramifications of the pandemic, one-in-five U.S. adults with a retirement account have taken a preretirement distribution from their account since March 2020.
“While Roth IRA contributions—not earnings, just contributions—can be withdrawn at any time for any reason without taxes or penalties, this is a one-way street,” Bankrate Chief Financial Analyst Greg McBride said in a statement. “The money comes out, but you don’t get to make larger contributions in later years to replace that money. It is a permanent setback to your retirement planning.”
Just 43% of households with a retirement account earning less than $50,000 have never taken a preretirement withdrawal, compared to just over half of those earning $50,000-$99,999 (52%) and those earning $100,000 or more (51%).
It’s concerning that 36% of all U.S. adults indicate they have never had a retirement account at all, such as a 401k or IRA. Fully 53% of Gen Z and half of those earning less than $50,000 annually have never had a retirement account. Even if a workplace retirement plan is not offered, those with earned income or a spouse that has earned income are eligible to contribute to an Individual Retirement Account (IRA), Bankrate notes.
More than half of working Americans (52%) also say they are behind on retirement savings. Just 21% feel they are on track for where they should be in terms of retirement savings and only one-in-nine (11%) feel as though they are ahead of the game. Sadly, 16% don’t know whether they’re on track or not.
More about the survey is found here.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of 401(k) Specialist and Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.