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Among all U.S. adults that currently have a retirement account, or have had one in the past, 51% have withdrawn money prior to retirement, according to a recent Bankrate survey.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“While Roth IRA contributions—not earnings, just contributions—can be withdrawn at any time for any reason without taxes or penalties, this is a one-way street,” Bankrate Chief Financial Analyst Greg McBride said in a statement.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.