The cost of living is constantly rising, forcing Americans to use their retirement savings in emergencies.

The cost of housing, healthcare, and education continues to rise, forcing more and more Americans to tap into their retirement accounts, despite facing hefty penalties and taxes for doing so. Vanguard Group Inc. stated in its annual "How America Saves" report on Tuesday that a record 6% of the nearly 5 million participants in its managed 401 plans made hardship withdrawals in 2025, up from 5% the previous year. About two-thirds of the withdrawn funds were used to avoid foreclosure or eviction, or to pay medical expenses, at proportions of 36% and 31%, respectively. Among those who accessed their accounts in 2025, about half did so more than once, and 21% did so three times or more. For those under the age of 59 and a half, this practice can be costly, as they are taking money out of traditional tax-deferred accounts and typically must pay not only income tax but also a 10% penalty.