Many Americans pulled large sums from retirement accounts in 2020
Nearly 60% of Americans withdrew or borrowed money from their IRA or 401(k) during the coronavirus pandemic, a new survey from Kiplinger and digital wealth management company Personal Capital found.
Why it matters: Most U.S. retirement accounts were underfunded already and the survey shows that the pandemic caused a significant number of Americans to pull money out, potentially setting them back even further.
Details: Nearly one in three (32%) respondents said they withdrew $75,000 or more from a retirement account, while 58% of those who took loans borrowed between $50,000 and $100,000.
- Pandemic-induced market volatility also left nearly three-quarters of respondents (74%) somewhat to very worried about their investments.
- More than 50% of respondents said they planned to work longer or delay retirement in order to build their nest egg.
The big picture: "The past year rocked the confidence of most Americans saving for retirement,” Mark Solheim, editor of Kiplinger Personal Finance, said in a release.
- “With many people dipping into their retirement savings or planning to work longer, 2020 will have a lasting impact for years to come.”
Backstory: Even most older Americans report that they don't have enough money saved for retirement, with the median family holding just $7,800 in 401(k)s, IRAs and other self-directed accounts, according to a 2019 study from the left-leaning Economic Policy Institute.
Of note: The CARES Act allowed people under the age of 59.5 affected by the coronavirus to take a distribution of up to $100,000 from an IRA, 401(k), or similar account without penalty. It also permitted loans of up to $100,000.