Pre-retirement use of 401(k) funds.

Abstract

Survey data from 2018 indicate that people accessing 401(k) funds prior to retirement through loans or hardship distributions tend to have other debts and poor credit ratings. The tendency for people with weak household balance sheets to tap 401(k) funds prior to retirement will increase the number of people entering retirement with inadequate financial resources. This problem was likely worsened by the increased pre-retirement use of funds during the COVID pandemic.