Almost one-third of Americans have borrowed against their retirement plan savings and 43 percent of those who have taken loans have done so more than once, according to a study by TIAA-CREF.
According to the study, “TIAA-CREF 2014 Borrowing Against Your Future Survey,” one of the main reasons for the borrowing has been to meet household needs.
The leading reason, according to the study, was to pay off debt. This was the reason given by 46 percent of respondents, yet only 26 percent said it was a good reason to take out a loan.
About 35 percent said the second most-cited reason for taking a loan was to pay for emergency expenditures, while 47 percent said they were borrowing against their savings. Of this group, 47 percent who borrowed from their retirement plan savings withdrew over 20 percent of their savings, with 9 percent of respondents borrowing more than 50 percent.
By gender, the study found that women were more likely than men (52 percent vs. 41 percent) to take out a loan to pay off debt. However, men were more likely (40 percent vs. 29 percent) to take out a loan to pay for an emergency expenditure.
The study also found that in addition to borrowing funds from retirement savings plans, many Americans contribute less to their plans while they are paying back the loan.
More than half of respondents (57 percent) who took loans decreased their contribution rate during the payback period. Those age 18-34 were the most likely to decrease their contribution amount (81 percent). Forty-eight percent of women kept the same contribution rate while paying back the loan, compared to only 39 percent of men, the study found.