Retirement Funds Often Unreturned After Withdrawal
A new study has found that roughly a quarter of those who are actively planning for retirement actually pull funds from retirement accounts.
The study by the Wall Street Journal and the Harris Interactive Personal Finance Poll found that the “most common reasons for premature withdrawals from retirement investment products include a family member losing a job and the cost of a down payment on a home. Financial pressures that motivate premature withdrawals seem to begin at age 35, when nearly one-third of respondents report doing so. Respondents under the age of 35 are more likely to withdraw funds for mortgage payments and to pay for an event than older respondents.”
“Wealthier respondents,” according to the study, those “with income of at least $50K are less likely to have prematurely withdrawn funds from their retirement investment products (70% of those who are actively planning for retirement have not done so). Those in the lowest income tier, under $35K, are more likely to be affected by a death in the family and require premature withdrawals — however only 35% of this segment is actually planning for retirement. Adults employed full time feel the least pressure to withdraw funds prematurely from their retirement investment products, with nearly 70 percent of those actively planning for retirement never having done so.”
Importantly, the study found that once withdrawn it’s tough to return pension funds.
“Nearly one-third of adults who have prematurely withdrawn funds from their retirement products cannot pay them back, and 45 percent either cannot pay back the funds or have not begun to do so. Those ages 45-54 are more likely to be unable to pay back their premature withdrawals. The youngest adults, 18-34, seem to be more financial responsible or less financially burdened, and are more likely to be currently making payments. Among the oldest respondents who have prematurely withdrawn funds, one-quarter of respondents are still actively contributing to their retirement investment products.
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