Forty-six percent of those leaving a job in 2008 tapped into their 401(k), maintaining an “alarmingly high” rate of people cashing in since 2005, Hewitt Associates said. Sixty-percent of those cashing in were in their 20s, and 33% were in their 50s.

However, those with more money saved tended to appreciate the importance of its purpose, with only 8% of those with balances of $100,000 or more dipping into the pot, and 85% of those with balances of $1,000 or less running with the money.

The human resources consulting firm based its findings on a study of 170,000 401(k) participants.

Regulators and employers need to do something to stop this tide, or they will risk millions of Americans living a sub-standard life in retirement, said Pamela Hess, director of retirement research at Hewitt. “Over the course of 20 or 30 years, modest amounts of savings can turn into surprisingly large sums of money,” she said.

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