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Monday, August 23, 2010

Increased 401K Withdrawals

The Huffington Post released an article recently describing how many Americans are being forced to withdrawal money from their 401k's to make ends meet.  The amount of hardship withdrawals have reached a 10 year high.  A hardship withdrawal is not a loan, this is a permanent withdrawal that carries a penalty and must meet certain hardship qualifications to obtain.  In the second quarter of this year 62,000 people initiated hardship withdrawals compared to 45,000 last year,  45% of those that withdrew last year also withdrew this year, showing a dependancy on their 401k's to make ends meet.  The number of people taking out loans against their IRA this year grew by 11% over last year.  [ Read more... ]

In my viewpoint this is a very disturbing trend as more and more people are depleting their 401k's just to survive.  Another disturbing issue is the amount of loss investors/retirees have taken in their 401k's over the past 3 years to the scandalous Banks, Hedgefunds and risky investment assets that were bailed out.  Now more and more retirees have had to go back to work to make ends meet.  This combination of events means a tight employment market will be flooded with an increased number of people that otherwise would have retired in the years/decades to come.  

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