Americans are stealing from their own futures to survive the present. Hardship withdrawals from 401(k) savings more than doubled in three years. Loan usage jumped 80 percent in 2025 from the prior year. The share of workers with an outstanding 401(k) loan climbed to 22.2 percent, up from 12.4 percent in 2024.
The Numbers
According to the Plan Sponsor Council of America’s annual survey, the share of participants taking a hardship withdrawal rose to 3.4 percent last year — the third straight annual increase and more than double the 1.5 percent recorded in 2022. The average loan amount fell to $9,818 from $13,710.
Workers are borrowing less because they have less to borrow. They are taking smaller loans because their accounts are smaller. They are withdrawing what they can because they have no other choice.
“Affordability is driving this data,” said Will Hansen, PSCA’s executive director. “When everyday costs keep climbing, the 401(k) becomes the emergency fund, and more workers are taking smaller loans and hardship withdrawals just to keep up.”
The Reality
Inflation peaked at 9.1 percent in June 2022 — a 40-year high. It has eased since then, but it remains above the Federal Reserve’s 2 percent target. Prices are still rising. Wages are not keeping up. And workers are paying the price with their retirement.
The average 401(k) balance rose 21 percent to $186,431, according to the survey. That sounds like good news. But it is not. It means the people who have money are making more money. The people who do not are falling further behind. And when they need cash, they have no choice but to take it from the only savings they have.
The Penalty
Hardship withdrawals are not free. They permanently reduce retirement savings. They are subject to income taxes. And they come with a 10 percent early withdrawal penalty if you are under 59 and a half.
So workers are not just stealing from their future. They are paying a penalty to do it. They are being punished for being poor.
The Bottom Line
401(k) loans jumped 80 percent in 2025. Hardship withdrawals more than doubled in three years. Workers are raiding their retirement savings because they cannot afford to live. The average loan amount fell to $9,818, meaning people are borrowing less because they have less. Inflation and stagnant wages are driving the trend.
My Opinion
This is what economic desperation looks like: millions of Americans quietly stealing from their own futures because they cannot afford to live in the present.
They are not doing it because they want to. They are doing it because they have to. Because rent is too high, groceries cost too much, and the paycheck does not stretch far enough because the system has failed them.
The average 401(k) balance went up 21 percent. Politicians will point to that and say the economy is fine and the stock market is booming. But the stock market is not the economy or the grocery store.
Workers are raiding their 401(k)s because they are broke. That is the story. And no amount of stock market cheerleading can change it.
The people who run this country — the politicians, the policymakers, the economists — they do not live like this. They do not have to choose between retirement and survival. They have pensions, savings and don security. They have no idea what it is like to open a 401(k) statement and wonder if you will ever be able to retire.
But millions of Americans do. They are taking loans they cannot afford and sacrificing their futures for a present that is already unbearable. And the people in power are doing nothing.
