401(k) breaches undermining retirement security for millions

[xchrom]

http://www.washingtonpost.com/business/economy/401k-breaches-undermining-retirement-security-for-millions/2013/01/14/f54a0e90-5e70-11e2-8acb-ab5cb77e95c8_story.html

A large and growing share of American workers are tapping their retirement savings accounts for non-retirement needs, raising broad questions about the effectiveness of one of the most important savings vehicles for old age.

More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show. The withdrawals, cash-outs and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already shaky retirement security for millions of Americans.

With federal policymakers eyeing cuts to Social Security benefits and Medicare to rein in soaring federal deficits, and traditional pensions in a long decline, retirement savings experts say the drain from the accounts has dire implications for future retirees.

“We’re going from bad to worse,” said Diane Oakley, executive director of the National Institute on Retirement Security. “Already, fewer private-sector workers have access to stable pension plans. And the savings in individual retirement savings accounts like 401(k) plans — which already are severely underfunded — continue to leak out at a high rate.”


(The Washington Post/Source: Author’s analysis of the 2010 SCF and SIPP; Argento, Bryant, and Sabelhaus (2012); Abstract of 2010 Form 5500 Annual Reports) - The comparative value of the Retirement Breach problem

[Demo_Chris]

1. Many of us have never had any to begin with

[aandegoons]

2. I took a couple of small loans out of my 401k recently.

To help pay for my children's college cost. Not seeing the error in my judgement as long as I can make my 401k goal. Pay myself back with interest seems better than paying someone else interest on that money.

Of course I only have 5 years left to work so maybe it is different for each of us. I find you must take all things into consideration in financial decisions. Not just what the so called experts say.