Nik Rajkovic / news@whmi.com

New data suggests more Americans dipped into their 401k retirement fund last year to cover emergency expenses, or simply to make ends meet.

That's according to investment platform Vanguard, which reports 3.6 percent of its 401K clients made early withdrawals from their retirement plans last year -- up from 2.8 percent in 2022.

"Very rarely is the 401K the best option, but I wouldn't say it's never the correct option," says WHMI retirement advisor Brad Jones. "Normally, that would mean you're going to have to work a few more years because of taking from your permanent vacation/retirement fund in the future."

Jones says everyone's situation is different, but a "hardship" withdrawal from your 401k comes with consequences.

If you dip into retirement before age 59 1/2, Jones says expect to pay a 10-percent penalty, on top of income tax to the IRS.

"Desperate times call for desperate measures," he says. "I'd say the first low-hanging fruit is go out to eat less. Quit smoking cigarettes. Stop drinking beer. Start drinking tap water."

"Cut the cord. Get rid of subscriptions. There are a bunch of services out there now where you can make sure you're not paying for subscriptions you don't need."

A link to Vanguard's “How America Saves 2024” report is posted below.

You can listen to Brad Jones' "Climb Through Retirement" show Saturday mornings at 7:30 on WHMI, or the podcast at WHMI.com.