With 22.1 million Americans either unemployed or underemployed, retirement savings have taken a major hit since the Great Recession.
A study by Transamerica Center for Retirement Studies surveyed more than 900 people in March who consider themselves unemployed or underemployed to determine just how bad the situation has gotten.
Thirty-five percent of the unemployed and 36 percent of the underemployed have tapped their retirement to pay for living expenses. For those who have been unemployed or underemployed for less than a year, 23 percent said they had withdrawn funds from their retirement accounts, and for those who have been out of work for more than a year, 42 percent have taken money out of retirement savings.
The numbers are higher for those who participated in a 401(k) or similar plan at their most recent employer. Forty-three percent have taken withdrawals from their accounts, including 53 percent of the unemployed and 38 percent of the underemployed.
“This leakage from retirement accounts was more likely out of necessity vs. a lack of awareness of the consequences: 80 percent of those with a retirement account said they were familiar with the taxes and penalties associated with taking an early withdrawal,” Transamerica said.
Fifty-five percent of these individuals also took money from their personal savings; 43 percent received money from unemployment benefits, and 36 percent were using their credit cards to pay bills.
Among those surveyed, the median household savings in retirement accounts was $7,500, with those in their 20s and 30s holding an average of $5,800 and those in their 60s holding a median of $93,000.
Those who had a college education were more likely to have larger retirement savings. The estimated household savings in retirement accounts among those with a college degree was $60,300 compared to $3,300 among those with a high school diploma or just some college.
When looking for a job, only 17 percent of those surveyed said they are seeking generous retirement benefits. Fifty-six percent of the unemployed or underemployed job-seekers said that competitive pay is one of their top three most-important job characteristics, followed by company stability (33 percent) and a convenient commute (31 percent).