They Withdrew 401(k) Money Early, and They Have Some Regrets

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Retiring

They Withdrew 401(k) Money Early, and They Have Some Regrets

More Americans are taking hardship withdrawals from workplace retirement accounts, prompted by rising costs — and looser rules.


Adia Rad said the rising cost of necessities like gas, groceries and child care — plus surprise expenses — had led her to take thousands in hardship withdrawals from her 401(k). Kristen Zeis for The New York Times

By Kailyn Rhone
April 18, 2026

Adia Rad never imagined she would be the person to take money out of a 401(k) before retirement. Then 2025 came, and unexpected bills and rising costs started to hit her pockets. So she decided to tap into her retirement savings, not just once but four times, that year.

As a single mother, Ms. Rad said, she found that it had become harder to keep up with essentials like gas, groceries and child care. Before making the withdrawals, she had about $10,000 saved. She used the money to cover expenses such as $2,000 for car registration fees and overdue tolls; $1,500 for dental surgery for her 10-year-old dachshund, Dewey; and other unexpected emergencies.

At the time, the 10 percent early-withdrawal penalty plus taxes felt like a reasonable trade-off to Ms. Rad, 32, as she wouldn’t have to pay those until the next year. The account was tied to a former job, and she preferred having cash on hand rather than falling into debt. ... Now, however, with $1,200 in penalties due with her tax return this year, her biggest regret isn’t tapping into her retirement savings — it’s withdrawing from the account last year instead of this year, when her expenses grew even more.

“I wish I would have waited to take it out now,” said Ms. Rad, a construction administrator who lives in Norfolk, Va., where she said gas prices were up to nearly $4 a gallon and her electric bill was around $300 to $400 a month. “Things are getting worse, and I feel like I didn’t expect it to get worse than what it already was.” ... More Americans like Ms. Rad are turning to hardship withdrawals from their 401(k) accounts to cover unexpected expenses or emergency costs, according to a report from Vanguard, which administers retirement plans for nearly five million people. Other firms, like Fidelity and Charles Schwab, also reported increases.

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Kailyn Rhone is a Times business reporter and the 2025 David Carr fellow.

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