Following the rash of home equity loans that Americans regretfully took out over the past few years on their first or second mortgages essentially turning their homes into ATM machines, as many a critic has quipped their 401(k)s are now in danger of becoming the next get-cash-quick scheme, The Wall Street Journal reports.
Americans are increasingly turning to their 401(k), IRA or insurance savings for some ready cash. Indeed, a Wall Street Journal Online/Harris Interactive Personal Finance Poll has discovered that about 25% of people planning for retirement have already taken out money from their savings either through a loan or a hardship withdrawal, usually because of a job loss or to put a down payment on a house. And of these people, about a third are unable to pay the money back.
As Tim Johnson, an investment strategist with Lincoln Financial Advisors, put it: There is no ATM without consequences.