Record Number of Americans Raid 401(k) Savings to Cover Medical Bills and Eviction Risk
Mar 11th 2026
Vanguard's How America Saves 2026 report shows a record share of workers tapped 401(k) accounts in 2025 to meet urgent bills even as average balances hit an all-time high, highlighting a split between broadly rising savings and growing short-term financial distress.
- 6% of 401(k) participants took a hardship withdrawal in 2025, the highest level on record and triple the pre-pandemic rate.
- This is the sixth consecutive year of rising withdrawals since rules were eased in 2018.
- Average 401(k) balances rose 13% in 2025 to a record $167,970 while 45% of holders increased their savings rate.
- The average hardship withdrawal was about $1,900 and is commonly used to cover medical bills, eviction or foreclosure risk, and other emergencies.
- Congress has expanded eligible reasons and allowed some limited penalty-free emergency access for cases like abuse or disasters, but traditional withdrawals remain subject to income tax and a 10% penalty if taken before age 59.5.
- Automatic enrollment rose to 61% of Vanguard-administered plans in 2025, increasing the pool of workers with retirement assets to draw on.