Many people take early withdrawals from their retirement accounts and this can cost you a lot of money in both penalties and earnings. Millenials are most likely to take retirement money out, with boomers being the least likely. Debt is the number one reason for the withdrawals. People have high credit card debts and student loans that need to be paid back, in fact 81% do. 401k’s are designed to help with a financially secure retirement. The compound interest you lose in early withdrawals can cost you a lot. An example would be if you take 5,000 out of your retirement account in your 20’s you lose the potential of that money growing to 51,000 in your retirement age.
- Millennials are the highest likely of any demographic to withdraw retirement account savings early.
- People most frequently withdraw their retirement savings to pay off credit card debt. This impacts their gains later on.
- Millennials have an average of $3700 in credit card debt and often struggle with this.
“Nearly half (49%) of people with retirement accounts have withdrawn the money early, according to data released Thursday by Bankrate.”