Inflation, high prices force more people to raid retirement savings
LAS VEGAS (KLAS) – As inflation continues to take hold across the United States and in Nevada, financial companies report a record number of 401k withdrawals as people try to make ends meet.
“Things have gone up,” Camerlo Johnson said of the world’s current state.
Many in Las Vegas told 8 News Now they are feeling the impact of inflation, sharing both frustrations and struggles over high prices.
“The regular 9 to 5 is not helping,” Julian Gonzalez said.
“If you’re just on your own,” Camerlo Johnson added. “It can be hard, it can be real hard out here.”
According to The U.S. Department of Labor, October’s current rate of inflation has been listed at 3.7 percent.
The figure is a lot lower than it was this time last year, but it’s still well above the Federal Reserve’s target of two percent.
“Right now,” Catey Hill, Managing Editor for MarketWatch said. “Your people are just feeling the strain.”
Therefore, people are doing anything possible to make ends meet, even raiding retirement funds.
Financial Firm Fidelity saw its highest number of 401k hardship withdrawals ever in 2022, listing a 2.4% share.
Experts like Hill don’t recommend this move, but she added that a lot of people don’t have a choice.
“When you tend to have lower incomes than other people,” Hill said. “Which makes it harder when you’re getting hit with student loan payments, and all these other things at one time.”
Many added that they have turned to retirement money, as higher interest rates have made loans and credit cards more difficult to pay.
“It’s bad when you get to a point where people have to take out their life savings,” Gonzalez said. “To use it right now.”
Many told 8 News Now the difficulties have hit them firsthand, adding that they hope to see something give in the near future.
“Can’t make ends meet,” Gonzalez concluded.
Anyone considering a 401k hardship withdrawal should keep in mind that it is only allowed under specific circumstances such as to pay medical bills not covered by insurance or to avoid foreclosure.
The withdrawal also comes with a 10% tax penalty.
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