More Workers are Using Their 401Ks for Non-Retirement Purposes

[bjl584]

401(k) breaches undermining retirement security for millions - The Washington Post

"More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show."

[disneysteve]

401(k) breaches undermining retirement security for millions - The Washington Post

"More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show."

I've said for a long time that they should eliminate the ability to take loans from 401k plans. I'd love to see them also eliminate early withdrawals. Same for Roths. Get rid of the ability to withdraw your contributions without penalty. These are RETIREMENT plans. They should be used for RETIREMENT and nothing else.

[phantom]

I like the end of the article:

“The investment advice out there needs to recognize that a large share of participants is not going to use the money for retirement, so they should not be exposed to risky investments,” Fellowes said. “There is no investment adviser in the country who would put workers in the stock market if they were told the money being invested was for short-term needs.”

Clearly the problem is that the money in retirement accounts just isn't invested correctly for the short term. It would be perfectly fine to withdraw from a 401k that wasn't invested in stocks. /sarcasm

In general, the article seems to be saying that people are putting away more money for retirement than they can actually live without in the short term. But, I suspect that the problem is more that people aren't managing the money that they already have for the short term well enough. It's a shame the article doesn't say more about how many people plan on being able to withdraw from 401ks and how many just happen upon it as an option when they find they could use more money. Is this more a matter of poor planning or lack of planning?