Despite booming markets and record account balances, more workers are tapping their 401(k)s than ever. Vanguard data tells the paradoxical story: while average 401(k) balances hit a record $167,970 in 2025, hardship withdrawals also reached an all-time high of 6%—triple the pre-pandemic rate.
The primary drivers are housing and healthcare costs. Workers are using retirement savings to avoid foreclosure and eviction, and to pay medical expenses, with a median withdrawal of $1,900. This marks the sixth consecutive year of increases since Congress made it easier to access 401(k) funds in 2018 by eliminating the loan requirement.
The trend reflects America’s divergent economy: most workers are building wealth through automatic enrollment and rising markets, but others face financial emergencies severe enough to sacrifice their retirement security. More people have 401(k) savings to tap, but more also need to tap them.
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Despite booming markets and record account balances, more workers are tapping their 401(k)s than ever. Vanguard data tells the paradoxical story: while average 401(k) balances hit a record $167,970 in 2025, hardship withdrawals also reached an all-time high of 6%—triple the pre-pandemic rate.
The primary drivers are housing and healthcare costs. Workers are using retirement savings to avoid foreclosure and eviction, and to pay medical expenses, with a median withdrawal of $1,900. This marks the sixth consecutive year of increases since Congress made it easier to access 401(k) funds in 2018 by eliminating the loan requirement.
The trend reflects America’s divergent economy: most workers are building wealth through automatic enrollment and rising markets, but others face financial emergencies severe enough to sacrifice their retirement security. More people have 401(k) savings to tap, but more also need to tap them.
Sign up for the Entrepreneur Daily newsletter to get the news and resources you need to know today to help you run your business better. Get it in your inbox.
