American workers who exhausted their meager savings because they lost their jobs or experienced a drop in income as a result of the COVID-19 pandemic were at least twice as likely to take money from their qualified retirement savings accounts as those who weren’t affected, a new study reports.
The Secure Retirement Institute, the education and research effort of the financial services trade group LIMRA, surveyed more than 1,400 U.S. non-retired households with qualified retirement savings accounts and found almost half (49%) had experienced a reduction in work income through job loss, a decrease in their hours and/or a pay cut. These households were more likely than those not directly affected by the pandemic to access their retirement plan balances, the study found.
A general lack of emergency savings was a key reason for accessing qualified retirement accounts, SRI found.
A quarter of workers (26%) said their emergency savings would cover less than one month’s expenses; nearly half (48%) reported having only enough emergency savings to cover three months’ expenses or less.
“The lack of emergency funds and the staggering job loss that occurred over the past few months will have long-term ramifications on retirement security for many Americans,” said Matthew Drinkwater, SRI’s research director.
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