The number of hardship withdrawals from U.S. 401k retirement accounts has risen to a record high.

Although the surge of artificial intelligence and the wave of data center construction are driving U.S. stocks higher, beneath the surface prosperity, the number of 401(k) hardship withdrawals has risen to a historic high. **According to Vanguard’s “How America Saves 2025” report, the rate of hardship 401(k) withdrawals has risen to a historic high of 6% in 2025, up from 4.8% in 2024, and was only about 2% before the pandemic.** This increase marks the sixth consecutive year of rising hardship withdrawals since the U.S. Congress relaxed related regulations in 2018. At that time, the policy removed the requirement that participants must first apply for a 401(k) loan before withdrawing funds. Vanguard states that the median amount withdrawn for hardship is about $1,900, mainly used for: - Avoiding foreclosure or eviction (36%) - Paying medical expenses (31%) - Paying tuition fees (13%) The report says: “Given that it is now easier to apply for hardship withdrawals, and the automatic enrollment mechanism allows more employees—especially low-income groups—to begin retirement savings, it is unsurprising that hardship withdrawals have slightly increased.” The report also points out: “For the small portion of employees facing financial stress, hardship withdrawals may serve as a safety net. Without the automation mechanisms within pension plans, they might not have access to such a buffer.” The report shows that against the backdrop of the ongoing cost-of-living crisis, the current K-shaped U.S. economy persists with no sign of ending. The most financially vulnerable are forced to dip into their 401(k) and retirement accounts to maintain basic living needs. Industry insiders note that withdrawing money from a 401(k) has become one of the easiest ways to access extra funds. Nearly half of Americans cannot come up with $1,000 for emergency expenses—they have no emergency savings and no available credit, nothing at all. Earlier this week, Muddy Waters founder Carson Block predicted that, under the impact of AI, 15% of U.S. knowledge worker jobs will disappear within the next three years. The core concern is that once the unemployment rate rises and compresses inflows into retirement accounts like 401(k), even forcing unemployed workers to prematurely use their savings, the stock market will face sustained capital outflows, and at that point no one will catch the falling knife. Risk Warning and Disclaimer The market has risks, investment needs caution. This article does not constitute personal investment advice and does not take into account the individual investment objectives, financial situation, or needs of users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Any investment based on this article is at your own risk.