Americans Increasingly Tapping Into Their Retirement Accounts to Make Ends Meet

  by   0   0

“Resilient” American consumers are digging into their retirement funds to pay their bills.

Mainstream financial pundits, politicians, and Fed officials keep telling us the economy is strong because Americans keep spending money. They just assume this is a sign of economic strength without ever asking exactly how they’re paying for all of this “robust” spending.

The fact is Americans have blown through their savings, they’re maxing out their credit cards, and now they’re digging into their retirement savings to maintain this involuntary spending spree caused by rampant price inflation.

As prices skyrocketed last year, Americans blew through their savings to make ends meet. Aggregate savings peaked at $2.1 trillion in August 2021. As of June, the San Francisco Fed estimated that aggregate savings had dropped to $190 billion.

In other words, Americans ate away $1.9 trillion in savings in just two years.

Then they turned to plastic.

Credit card balances increased by 4.7% to a record $1.08 trillion in the third quarter of this year. Year-on-year, credit card debt spiked by $154 billion. That was the biggest annual increase since 1999.

Now Americans are raiding their retirements.

As Bloomberg reporter Alex Tanzi put it, “Americans are increasingly tapping their retirement savings to cover housing and medical bills amid higher cost-of-living pressures, according to data released Monday from Fidelity Investments.”

According to data released by Fidelity Investments, around 2.3% of workers took a hardship withdrawal from their retirement accounts last quarter. That was up from 1.8% a year earlier. According to Fidelity, the top two reasons given for the uptick were to avoid foreclosure or eviction, and for medical expenses.

Meanwhile, 2.8% of 401(k) retirement account participants took a loan against their account in Q3. Currently, about 1 in 6 (17.6%) of workers has an outstanding loan.

The average 401(k) balance came in at $107,700 in Q3, down 4% from the second quarter. Over the last five years, fund levels have remained stable.

In a separate Fidelity survey, 8 out of 10 workers said price inflation and the rising cost of living are causing them stress.

It should go without saying that blowing through your savings, running up credit card debt at over 20%, and raiding your retirement to pay the rent isn’t a sign of economic prosperity. It’s a sign of desperation. And there’s a lot of it out there.

Student Loan Bubble Free Report

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.

Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Buka akaun dagangan patuh syariah anda di Weltrade.
Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also
Back to top button